When most retirees think of healthcare investing, they immediately picture big pharmaceutical companies and biotech breakthroughs. But there’s a quieter, equally powerful part of the healthcare world that often goes unnoticed—medical devices.
From life-saving pacemakers to high-tech insulin pumps and game-changing surgical robots, medical devices are some of the most essential tools in modern medicine. And for investors—especially retirees looking for steady growth and reliable income—they can be an incredibly smart choice.
In this post, we’ll spotlight the world of medical devices, why they deserve a place in your retirement portfolio, and how to invest in them the safe and simple way using ETFs.
What Are Medical Devices?
Medical devices are tools, machines, or implants used to diagnose, monitor, or treat diseases and conditions. Unlike drugs that are consumed, medical devices are physical products used in procedures or daily patient care.
Here are a few common examples:
- Pacemakers that regulate heartbeat
- Insulin pumps that help manage diabetes
- Surgical robots that enable precise, minimally invasive surgeries
- Joint replacements, such as artificial knees and hips
- Stents and catheters used in cardiovascular procedures
- Diagnostic imaging machines, like MRI and CT scanners
These devices are used in hospitals, doctor’s offices, and even at home by millions of patients every day. And as the global population ages and chronic conditions become more common, demand for these devices continues to grow steadily.
Why Medical Device Companies Are Ideal for Retirees
Medical device companies offer a unique combination of innovation, consistency, and resilience. Here’s why they’re particularly appealing for retirees:
✅ Steady, Long-Term Growth
Unlike many sectors that go through booms and busts, medical devices benefit from consistent demand. Whether the economy is thriving or in a downturn, people still need pacemakers, joint replacements, and other critical devices.
Retirees can take comfort in the fact that this sector isn’t tied to consumer whims or economic cycles. As long as people age and get sick—and sadly, they do—medical devices remain essential.
✅ Less Government Price Pressure
In recent years, governments around the world (including the U.S.) have started pushing back on high drug prices. New legislation has allowed Medicare to negotiate prices on certain prescription drugs, squeezing profits at many big pharmaceutical companies.
But medical devices have largely escaped this pressure.
Because these products often require specialized manufacturing, regulatory approval, and training to use, they’re harder to commoditize and replace. Hospitals and surgeons don’t switch to cheaper alternatives easily when precision and safety are at stake.
That means medical device companies can better protect their pricing power—good news for long-term investors.
✅ Innovation Without Extreme Volatility
While the biotech sector often grabs headlines with experimental drugs and roller-coaster stock moves, the medical device sector innovates in a more measured, predictable way.
Yes, there are breakthroughs—like robotic-assisted surgery—but many advancements are iterative: better battery life for a pacemaker, improved software for a pump, or a less invasive catheter design.
This steady innovation provides room for growth without the extreme risk that comes from betting on a single drug approval.
✅ Dividends and Durable Income
Some of the largest and most successful medical device companies are known for paying regular dividends. That’s a big plus for retirees looking for income.
And since these companies aren’t as exposed to economic swings, those dividend payments tend to be more reliable than in sectors like energy or tech.
3 Top Medical Device Companies to Know
While you can invest in individual stocks, most retirees prefer the diversification and simplicity of ETFs (more on that shortly). Still, it helps to understand the companies driving the sector forward.
Here are three industry leaders that dominate the medical device space:
1. Medtronic (Ticker: MDT)
Medtronic is one of the world’s largest medical device companies. They manufacture products for cardiac care, diabetes management, brain and spine surgery, and more.
Why it stands out:
Medtronic is a dividend aristocrat—meaning it has raised its dividend for more than 25 consecutive years. It operates globally and benefits from strong brand recognition in hospitals around the world.
2. Stryker Corporation (Ticker: SYK)
Stryker is a leader in orthopedic implants (like hips and knees), surgical tools, and neurotechnology.
Why it stands out:
Stryker combines strong innovation with a solid balance sheet and dependable growth. It’s a favorite among long-term investors who want exposure to surgical and mobility solutions as the population ages.
3. Intuitive Surgical (Ticker: ISRG)
Best known for its da Vinci robotic surgical systems, Intuitive is at the cutting edge of surgical innovation.
Why it stands out:
While it doesn’t pay a dividend, Intuitive Surgical dominates the fast-growing field of robotic-assisted procedures. It earns recurring revenue from disposable instruments used in each procedure, providing a stable income stream.
The Smarter Way to Invest: Medical Device ETFs
If the idea of picking individual stocks feels overwhelming, there’s a simpler and safer path: ETFs (Exchange-Traded Funds) that focus on the medical device industry.
These funds give you instant diversification, professional management, and exposure to dozens of companies—all with a single purchase.
Here are three excellent ETFs that focus on medical devices:
1. iShares U.S. Medical Devices ETF (Ticker: IHI)
What it holds:
This fund is laser-focused on U.S. companies that manufacture and sell medical devices.
Top holdings: Abbott Laboratories, Medtronic, Stryker, Boston Scientific.
Why it’s great for retirees:
It’s the go-to ETF in the medical device space with a long performance track record, relatively low fees, and exposure to both large and mid-sized companies. IHI provides broad access to the device sector without the need to pick winners.
2. SPDR S&P Health Care Equipment ETF (Ticker: XHE)
What it holds:
This fund includes smaller and mid-sized medical device and equipment companies, with equal weighting rather than favoring the largest firms.
Top holdings: Companies like Insulet, Inogen, and Penumbra.
Why it’s great for retirees:
Because every company in the fund is equally weighted, it provides a more balanced exposure. This can reduce risk if one large company stumbles and offers upside from smaller innovators.
3. First Trust Health Care AlphaDEX Fund (Ticker: FXH)
What it holds:
This smart-beta fund includes a broad mix of healthcare companies, including a strong weighting toward medical device makers.
Why it’s great for retirees:
FXH uses a rules-based selection system focused on value and growth metrics. It doesn’t focus solely on medical devices but often has 20–30% exposure to the sector. It’s a great option for those who want to mix medical devices with broader healthcare exposure.
What About Dividends?
Many medical device ETFs, especially those with larger companies, pay regular quarterly dividends. These may not be sky-high—typically 1% to 2%—but they’re stable and often grow over time.
Dividends can be especially important for retirees who want to generate passive income while still enjoying potential capital appreciation.
How Much Should You Invest?
There’s no one-size-fits-all answer, but many financial advisors suggest keeping 10% to 20% of your portfolio in healthcare-related investments. Of that, medical devices could reasonably account for 5% to 10%, depending on your risk tolerance and income needs.
Medical device ETFs are best held as part of a diversified retirement portfolio, possibly alongside more conservative bond funds, dividend stock ETFs, and cash.
Wrapping Up: Don’t Overlook These Unsung Heroes
Medical devices may not grab as many headlines as miracle drugs or biotech breakthroughs, but they’re the quiet engines of modern healthcare. They keep people moving, breathing, pumping, and healing—and they keep delivering results for investors, too.
With steady demand, pricing power, and innovation baked into their business models, medical device companies offer retirees a compelling blend of growth, safety, and income.
And with the simplicity and diversification of ETFs, investing in this dynamic sector has never been easier.
If you want to learn more about building a safe and rewarding retirement portfolio with healthcare ETFs, be sure to check out my book:
Your Healthy Portfolio: Building Wealth With Low-Risk Healthcare ETFs – available now in paperback and eBook formats at Amazon.com.
Disclaimer: This article is for educational purposes only and does not constitute financial advice. Always consult with a licensed financial advisor before making any investment decisions. Investing involves risk, including the potential loss of principal. Past performance does not guarantee future results.