Why Intuitive Surgical (ISRG) is a Solid Investment for the Year Ahead

Intuitive Surgical (ISRG) stands out in the medical field, especially with its advanced surgical devices. No matter what happens in 2025 with the Federal Reserve or the incoming President, surgeries are a constant in American healthcare.

Surgeons can be costly and make mistakes, which is why many hospitals are turning to robotics. Intuitive Surgical developed the da Vinci system, the world’s most utilized surgical robot.

Business growth is strong. The company projects a demand increase of 12% to 16% year-over-year for its da Vinci system. This robot offers less invasive procedures, improving precision and allowing patients to recover quicker. The latest model, da Vinci 5, has already been utilized in over 12,000 surgeries.

Thriving Shareholder Returns

ISRG investors had an excellent experience during the Trump administration. The stock generated a return of 179%. Will history repeat itself, or at least echo, offering investors a similar reward again?

However, for those seeking dividends, there’s a downside—Intuitive Surgical does not provide one. Investors could create their own yield by buying shares and selling covered calls, but this can be cumbersome.

Currently, call options priced above ISRG’s stock are trading at a premium of over $10 per share, set to expire later this month. This presents an opportunity to purchase shares, write those covered calls, and secure a 2% premium.

This strategy can be repeated in February, March, and beyond. But why do this laborious task ourselves?

Instead, we can explore an indirect way to earn income through ISRG. This approach yields an impressive 14.3% annual dividend, paid monthly, with the added benefit of not requiring frequent management from us.

The answer lies in purchasing the closed-end fund (CEF) BlackRock Health Sciences Trust (BMEZ). ISRG makes up 4.6% of Dr. Erin Xie’s top holdings in this fund.

Interestingly, despite the potential for profit under a new Trump administration, BMEZ is astonishingly undervalued. It currently trades at a 9% discount to the true value of its assets.

This means investors can buy into this high-yield opportunity at just 91 cents on the dollar, essentially gifting them a 9% advantage without any extra effort.

Why this attractive dividend opportunity? Trump previously stated that he would let Robert F. Kennedy Jr. “go wild on health” during his campaign, which could be a troubling sign for healthcare investments.

Wall Street reacted quickly, selling off healthcare stocks following the election and particularly after RFK was nominated for the Department of Health and Human Services.

Big pharmaceutical companies especially faced the brunt of this reaction, as Trump remarked during a rally that he would let RFK “go wild on medicines.”

Yet, Intuitive Surgical is not a pharmaceutical company; it specializes in surgical robotics. Emotional investors are prone to overselling an entire sector, leading to the unjustified drop in BMEZ’s value.

This misjudgment extends to the fund’s top five holdings. Historically, these companies thrived during Trump’s first term!

Strong Performers from the Past

In fact, these companies saw returns of 126%, 141%, 179%, 227%, and over 1,000% during Trump’s first four years!

BMEZ offers a convenient option for income-focused investors to access these gains without the hassle. Dr. Xie’s fund utilizes covered calls for extra cash flow, so we can leave the intricate details of management to the experts rather than dealing with the complexity ourselves.

This additional income allows for impressive dividends. Furthermore, we have potential growth from holdings like Intuitive, especially if we see a repeat of Trump’s earlier presidency.

The healthcare sector overall is affordable, and BMEZ offers a clear bargain at just 91 cents on the dollar.

Investors received a modest dividend increase, too. The fund declared a dividend of $0.17809 in December, boosting the yield to 14.3%, with payments made monthly. This increase is part of BlackRock’s strategy to manage distributions effectively and achieve an annual target of 12%—successfully achieved.

This overlooked income opportunity in the CEF market is worth considering for its attractive dividend and discount. Adding BMEZ to our Contrarian Income Report portfolio enhances a well-rounded income calendar. Below is a snapshot of our diverse lineup of 23 investments projecting a 12-month yield of 8.49%, targeting an income of $84,912.81:

Income Calendar: $84,912.81 in Dividends for 2025

Importantly, many of these positions pay dividends monthly. For access to more high-yield stock recommendations, click here for my complete list of favorite monthly dividend payers.

Also see:

• Warren Buffett Dividend Stocks
• Dividend Growth Stocks: 25 Aristocrats
• Future Dividend Aristocrats: Close Contenders

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.