Abbott vs. Medtronic: Which Dividend-Paying MedTech Stock is Better?

Abbott ABT and Medtronic MDT, two leading giants in the global medical device space, are demonstrating strong momentum in 2025 despite various macroeconomic challenges, including significant tariff pressures.Medtronic just wrapped up a strong fiscal 2025 with 10.9% earnings growth and a 5.4% revenue improvement year over year, fueled by momentum in cardiovascular, neuromodulation and diabetes segments. The company reached new milestones with its Cardiac Ablation Solutions (CAS) and ENT businesses crossing $1 billion in annual revenues and announced a significant strategic move to spin off its Diabetes unit.Meanwhile, Abbott achieved high single-digit sales growth and double-digit earnings growth in first-quarter 2025 despite lingering post-pandemic disruptions. The company is gaining from a full pipeline of innovation, expanded biosimilar agreements and promising launches in diagnostics and neuromodulation.With each company focusing on its core strengths, the stage is set for a compelling comparison between the two. Let’s delve deeper to find out which stock has the edge.ABT, MDT Outperform S&P 500 in 2025Year to date, shares of Abbott have jumped 18.8%, while those of Medtronic have improved 6.5%. Both the stocks outperformed the S&P 500’s mere 0.8% gain over this period.Image Source: Zacks Investment ResearchKey Reasons to Be Bullish on AbbottRobust Growth in Diversified Business Segments: Abbott’s FreeStyle Libre franchise surged nearly 20% organically in the first quarter of 2025, reflecting strong global demand and the product’s growing role in managing Type 2 diabetes through advanced digital health integration. Meanwhile, the Diagnostics segment showed stabilization, with organic growth in core lab testing helping offset post-COVID declines.The Established Pharmaceuticals (EPD) segment posted mid-single-digit organic sales growth, driven primarily by strong performance in emerging markets. Beyond individual segments, Abbott delivered organic sales growth across all four of its major business units, Medical Devices, Diagnostics, Nutrition and EPD, highlighting its diversified revenue base.Strong Cash Flow and Shareholder Value Creation: As of the end of the first quarter, Abbott maintained a healthy balance sheet with strong liquidity, including over $6 billion in cash and short-term investments, giving it flexibility for both organic growth and potential M&A activity. Abbott generated $2.3 billion in operating cash flow in the first quarter of 2025.In terms of the company’s commitment to returning capital to shareholders, Abbott increased its quarterly dividend by 7.8% earlier this year, marking the 52nd consecutive year of dividend growth. Notably, Abbott is a member of the S&P 500 Dividend Aristocrats Index, which tracks companies that have annually increased their dividend for 25 consecutive years.Abbott’s payout ratio presently sits at 49% of earnings. Check for more details.Abbott Dividend Yield (TTM)Image Source: Zacks Investment ResearchMedtronic Too Holds Strong Long-Term ProspectsGrowing Momentum and Pipeline Expansion: Medtronic has been gaining significant traction across key therapeutic areas. Its CAS business grew nearly 30% in the fiscal fourth quarter, driven by strong demand for Affera’s Pulse Field Ablation technology, including the Sphere-9 catheter and the upcoming Sphere 360 system, which are set to enter pivotal U.S. trials.The Structural Heart segment posted 10% growth, fueled by rising adoption of the Evolut TAVR platform, supported by favorable real-world data and positive outcomes from the SMART trial and five-year low-risk studies, helping Medtronic gain share at leading U.S. centers. Neuromodulation also advanced 10%, led by next-generation systems like Inceptiv SCS and BrainSense DBS. Meanwhile, the company is expanding its digital surgical footprint with the Hugo robotic platform in 30 countries and scaling its AI-powered Touch Surgery system. These innovations, along with ongoing investments in renal denervation and hypertension trials, reinforce a strong long-term growth pipeline.Shareholder Returns and Dividend Growth: Medtronic returned $6.3 billion in fiscal 2025 through share repurchases and dividend payments. Notably, the company declared a dividend increase for the 48th consecutive year. Medtronic’s payout ratio presently sits at 52% of earnings. Check for more details.In addition, the impending Diabetes business separation is structured to be accretive to EPS and tax-free for U.S. shareholders, with a planned share retirement during the split-off. This strategy is expected to reduce share count and unlock shareholder value in both Medtronic and the newly independent Diabetes entity.Medtronic Dividend Yield (TTM)Image Source: Zacks Investment ResearchComparing Valuation: MDT Attractively Valued Than ABTMDT is trading at a forward 12-month price-to-earnings, which is a commonly used multiple for valuing healthcare stocks, of 14.41X, below its 5-year median of 16.19X and pretty close to the 5-year low of 13.13X. Meanwhile, ABT is presently trading at a forward 12-month price-to-earnings of 24.87X, which is above its 5-year median of 24.03X.This suggests that Medtronic remains attractively valued when compared with Abbott, as well as its own historical average.Image Source: Zacks Investment ResearchConclusion: Why Medtronic May Be a Better Buy Than Abbott NowWhile Medtronic and Abbott, carrying a Zacks Rank #3 (Hold) each, present strong fundamentals and a solid history of dividend growth, MDT currently offers a more compelling value proposition for investors. Trading below its 5-year median and near historical lows, Medtronic is more attractively valued than Abbott. Medtronic also has a higher payout ratio than Abbott currently. The upcoming Diabetes business spin-off, structured to be EPS-accretive and tax-efficient, further underscores the company’s focus on unlocking shareholder value. For value-driven investors seeking reliable income and long-term appreciation, Medtronic emerges as the more favorable choice over Abbott. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Abbott Laboratories (ABT): Free Stock Analysis Report Medtronic PLC (MDT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks