Medtronic Increases Payout 25%

Medtronic, the maker of medical devices, increased its quarterly dividend by 25%. The bigger payout is 38 cents, which is up from its 30.5 cents the prior quarter. The annual dividend of $1.52 gives the shares a dividend yield of 1.98%.

The company, which is based in Dublin, Ireland, upped its cash returns to its shareholders for 38 straight years.

The increase of 7.5 cents in the dividend is worth another $106.5 million for each quarter. In all, the payout is $2.2 billion, equal to more than 32% of the company’s free cash flow that is expected to be generated in 2015.

Medtronic said it is planning to bring its ratio of payout to 40%, with the recent boost it is now at 35%.

Medtronic reported a loss in the quarter ending in April, largely from charges of $1.2 billion related to the acquisition of Covidien as well as a tax dispute with the IRS.

In January, the company closed its deal worth $50 billion for the surgical supplies and medical devices company based in Ireland.

Medtronic then was reincorporated in Dublin from its original location of Minnesota, in part to exploit the lower tax rates in Ireland. Excluding that charge Medtronic earned just over $1.16 a share, better than analyst projections of $1.12.

Medtronic announced as well its plans of buying back another 80 million shares equal to 6% of its outstanding shares. The buyback priced using its recent stock prices would be worth nearly $6.2 billion. In the last five years, the business had repurchased more than $8.3 billion in stock. The business offered no timetable for the repurchase program.

Medtronic was one of the American companies that bought out a foreign company to reincorporate overseas in what is now referred to as tax inversion.

The U.S. government instituted new regulations regarding corporations in attempt to keep companies from leaving the U.S. and becoming domiciled in another country such as Ireland to pay fewer taxes.

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