The new repurchasing program supersedes a 2015 plan to reacquire 80 million shares, or about 6% of the total at that time.
Today Medtronic said it’s also raising its dividend to 46¢ per share, representing an annual dividend of $1.84 per share. The dividend-per-share payout ratio is 40% of last year’s adjusted earnings per share of $4.60, the company said.
It’s the 40th consecutive dividend increase, which including today’s boost grew at a 17% compounded annual rate during those years.
“Today’s increase in our dividend demonstrates the confidence of the board and our management team in the strength of the company’s cash flow generation and the ability to generate value for our shareholders,” chairman & CEO Omar Ishrak said in prepared remarks. “We are committed to returning a minimum of 50% of our free cash flow each year through dividends and share repurchases, balancing the return of cash to our shareholders with disciplined reinvestment in our business to drive sustainable growth.”
Early last year Medtronic revealed its plan for spending a $9.3 billion windfall from its $50 billion acquisition of Covidien, including a $5 billion share buyback by the end of April 2018.
Fridley, Minn.-based Medtronic said at the time that it planned to use most of the balance after the stock buyback to pay down debt, seeking to regain its A credit rating. The company committed to returning at least 50% of the $9.3 billion to shareholders, either through dividends or buybacks.