This Medical Device Stock Has Compounded at 13% Per Year for a Decade

Thermo Fisher Scientific (NYSE: TMO) provides the tools, software, and services to allow medical professionals the ability to analyze patient health. The company's own financial health has been predictably strong.

Even after a more than 15% pullback in its stock price this year, the company has still achieved a 13.8% compound annual total return over the past decade. At the beginning of this year, the total return was closer to 16%. That compares favorably to 10.8% for the iShares U.S. Medical Devices ETF over the 10-year period.

The company has managed growth through aggressive, yet strategic acquisitions. It buys smaller companies, which then benefit from Thermo Fisher's larger sales team and distribution channels. Its medical products touch every part of healthcare, and it is even getting a boost from the wave of weight-loss therapies as it manufactures the injection pens for Wegovy, the weight-loss drug from Novo Nordisk.

Putting its financials under a microscope

The company operates in four segments: life sciences solutions, analytical instruments, specialty diagnostics, and laboratory products and biopharma solutions. In 2025, the company reported revenue of $44.6 billion, up 4% and earnings per share (EPS) of $17.74, an increase of 7%. The growth was led by the life sciences solutions segment, which reported revenue of $10.4 billion, up 8%, thanks to increased bioproduction business.

Thermo Fisher just announced it was buying Clario Holdings, a provider of endpoint data solutions for clinical trials, for $8.8 billion. In 2025, the company closed two big acquisitions, buying the purification and filtration business from Solventum for $4 billion and a sterile fill-finish and packaging site in Ridgefield, New Jersey, from Sanofi for an undisclosed sum.

Not counting the addition of Clario, the company said, in its fourth-quarter earnings call, that it expects 2026 revenue to be between $46.3 billion and $47.2 billion, representing 5% growth at the midpoint and adjusted EPS to be between $24.22 and $24.80, up 7% at the midpoint.

Solid, dependable growth

Though Thermo Fisher's dividend has a below-average yield at around 0.36%, it has faithfully increased it over the past nine years and over the past decade, it has grown 213%. This year, the company raised it by 9% to $0.47 per quarterly share.

The stock remains a buy because its low-risk business is built on recurring revenue from its consumables -- the lab equipment, chemicals, diagnostic tests, and software -- that biotechs and pharmaceutical companies need to do their work.

James Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Thermo Fisher Scientific. The Motley Fool recommends Solventum. The Motley Fool has a disclosure policy.