The Best High-Yield Healthcare Stock to Invest $1,000 in Right Now

Key Points

• Healthcare is a complex business, with research and development playing an outsized role.

• Sadly, R&D success doesn't happen on a set schedule, so sometimes even great healthcare businesses can look like they're falling behind.

• Great businesses know how to deal with corporate bloat while still managing to focus on returning value to investors.

• 10 stocks we like better than Medtronic ›

I happily own stock in Medtronic (NYSE: MDT), one of the largest medical device makers in the world. Of late, the company is struggling through a rough patch that has Wall Street worried about the future. I'm not all that concerned about this, and I was happy to buy the stock while Medtronic offered up a historically high dividend yield. The yield is still hovering near its historical high, at around 3%.

If that well-above-market yield sounds interesting to you, too, here are the three big reasons why you might want to invest $1,000 in available cash to own Medtronic yourself.

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Image source: Getty Images.

1. Medtronic has a great business

Medtronic's stock trades down roughly 30% from its 2021 highs. That's a big drop and shows just how concerned investors are about the business. But the business remains strong. The company is still one of the largest medical device makers on the planet, and it's a vital partner to medical professionals around the world.

Data by YCharts

The problem is that new products have been slow to develop. And, at the same time, the company's profitability has been hit by rising costs as inflation has risen. Neither of these things is odd in any way. Research and development is always lumpy. And large companies, noting Medtronic's nearly $120 billion market cap, often go through periods of inefficiency. In other words, the headwinds that are so troubling to investors are, really, just kind of normal business events.

2. Medtronic has a proven history of success

Normal or not, Medtronic's headwinds are very real. It has to do something (that something will be discussed in point 3). I'm confident that management will figure out what needs to be done and, more to the point, successfully get it done. My confidence comes from the company's dividend history, with Medtronic having increased its dividend for 48 consecutive years. That's just two years shy of Dividend King status. You have to have a strong business model that gets executed well in both good times and bad to achieve a record like that.

In other words, Medtronic has worked through hardship before and survived. Notably, despite the difficulties, the board of directors continues to increase the dividend. The latest increase was announced in May 2025. It wasn't a huge hike, at just a penny per share per quarter (roughly 1.4%), but that's to be expected during hard times. The key is that the dividend was increased, which is a sign that the board and management are confident about the company's future.

3. Medtronic is making the right decisions

What, exactly, are the board and management so confident about? That's the crux of the story and why I happily own this high-yield healthcare stock despite the hard times it is facing. Basically, Medtronic is cleaning house as it also starts to bring new products to market.

Starting with the new products, the company went through a few years where it was navigating approval processes. That's unfortunate, but at this point, the company's surgical robot products are starting to gain traction. And so is its heart ablation technology. There are other new and improved products beyond those two, as well. The key is that the R&D drought looks like it has ended, and that suggests that growth will pick up again in the years ahead.

On the cleaning house front, Medtronic has been streamlining its business. The big goal is to improve profitability by focusing on its most attractive businesses. Jettisoning slow-growth and lower-margin operations has been a key focus. The next big move is the planned 2026 spinoff of the company's diabetes division. That move is expected to be immediately accretive to earnings and, more importantly to me, result in no changes to Medtronic's dividend policy. These are the types of things that good companies do as they regularly update and overhaul their businesses.

What $1,000 gets you with Medtronic

From a purely functional standpoint, a $1,000 investment in Medtronic will net you around 10 shares of the stock. But what you are buying is a well-run company that is currently out of favor on Wall Street despite the fact that it has a history of making the right moves to steadily grow over the long term. Add in the lofty yield and the impressive dividend history, and it should be hard for most dividend lovers, like me, to say no to what is on offer with Medtronic today.

That said, you may not want to wait too long. Medtronic just reported earnings that were better than analysts expected. And it boosted full-year guidance, as well. But the most notable news might be the fact that Medtronic increased the size of its board to include a representative from activist investment firm Elliott Management. Clearly, some prominent investors are starting to see an opportunity in the stock.

Should you invest $1,000 in Medtronic right now?

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Reuben Gregg Brewer has positions in Medtronic. The Motley Fool recommends Medtronic and recommends the following options: long January 2026 $75 calls on Medtronic and short January 2026 $85 calls on Medtronic. The Motley Fool has a disclosure policy.