A "Double Growth" Stock Like This Is the Perfect Fiscal-Cliff Defense

First, it was the mess in Syria.

Then we had to deal with the whole Team Bernanke "taper drama."

And now we're barreling into yet another "Fiscal Cliff" street fight.

With U.S. stocks trading at unsustainable highs, I can sympathize with those of you who look at these headlines with fear; you view each day's events as just the latest potential investing calamity, and worry they might ignite a single-day sell-off severe enough to eviscerate years of diligent saving and personal sacrifice.

I can even understand why many of you would like to scamper to the supposed safety of the sidelines.

But don't do it.

The sidelines, you see, aren't as safe as you might think. Missing the good days can be worse than riding out the bad ones. And you run the very real risk of getting left behind.

Plus, there's a way to stay invested - one that allows you to capture life-changing profits.

I'm going to tell you about it today.

And I'm even going to show you the one stock that will let you put this "Fiscal Cliff" defense strategy to work...

In Growth We Trust

If you've been joining our talks over at the Strategic Tech Investor over the past six months or so, then you know that I'm a big believer in the profit power of high-tech growth stocks.

I want my readers to break free of the "zero-net-worth" syndrome that afflicts far too many of America's households.

My Five Tech Wealth Rules have already delivered some very big winners for many of you. And a number of the remaining recommendations have set the table for profits still to come.

Over the long haul, I firmly believe that high-quality, tech-focused growth stocks are the key to meaningful wealth.

But I've also said there's room for solid dividend plays ... especially the kind of higher-yielding tech companies that are continuing to growth their businesses.

Indeed, now's a very good time to be looking for just that kind of stock.

U.S. companies are fat with cash right now and have nearly $1.7 trillion on their corporate balance sheets.

And as I'm going to show you, tech firms top that list.

New Doings in Redmond

Just last week, in fact, Microsoft Corp. (Nasdaq: MSFT) said it was boosting its dividend by a whopping 15%.

The elevated dividend will cost the company an extra $1 billion a year. But with $56 billion in cash and equivalents on hand as of June 30, the Redmond, Wash.-based Microsoft made a move that will hearten existing shareholders and draw in new institutional players - without hampering the company's strategic flexibility one iota.

With shares of the world's dominant marketer of PC software currently trading at about $33.50, the new 23-cent payout brings Microsoft's dividend yield to a very decent 2.7%.

In fact, "very decent" may be an understatement ...

We've all heard pundits repeatedly talk about "historically low" interest rates.

But have you really stopped to look at what this actually means? Because it's pretty doggone dramatic.

As of last week, the yield on a one-year U.S. Treasury note was a mere 0.10%. Basically, for every $100 you lend to the government for the next year, they give you back a dime.

So if we use U.S. Treasury yields as our yardstick, Microsoft's dividend payout makes it seem like Fed Chief Ben Bernanke personally handed us the keys to a bank vault.

Assuming the stock merely breaks even over the next year, for every $100 you invest, you get back $2.70. That's roughly 24.5 times the return you get on short-term U.S. bonds.

And Microsoft is our kind of dividend stock - the kind that I referenced above. It's a company that offers a nice payout - and has a shot at some substantive upside growth. (As the investment pros that I deal with would say, it's a stock that offers a strong and potentially growing income stream... with the chance for capital appreciation.)

In the parlance of institutional players, there's suddenly "upside potential" in this leader-turned-laggard because there are some very clear "catalysts" at work.

In the last several months, Microsoft has unveiled a sweeping corporate restructuring. It has said that longtime CEO Steven A. Ballmer will retire, and the company announced a $7.2 billion deal involving the mobile-devices unit of Nokia Corporation (ADR) (NYSE: NOK).

I don't think the stock will just stand still for the next year. If it can even manage to match the previous one-year gain of 7.3%, your "total return" (capital appreciation plus the dividend payout) rises to 10%.

That kind of return might fit nicely in a portion of your portfolio - say, in your kid's college savings account ... where slow-and-steady is a great way to plan ahead and still sleep soundly at night.

A New King in Cupertino

We're seeing a very similar story over at Apple Inc. (Nasdaq: AAPL). Last year, new CEO Tim Cook decided to use some of the i-Device pioneer's $100 billion cash hoard to pay a special dividend to shareholders. That $2.65 payout worked out to a 1.8% yield.

Since then, the Cupertino-based Apple has announced plans to pay a regular dividend. The current payout of $3.05 a share was up 15% from its February predecessor - and represents about a 2.6% yield at current prices.

There's a new growth story taking root at Apple, as well, with record-setting sales of the new iPhone, a hot new mobile operating system, and a racy new chip that's lighting up global tech blogs.

Thanks, in part, to these developments, the onetime tech titans of Microsoft and Apple have reinvented themselves as growth-and-income plays.

But as new members of the dividend-payout club, it'll be quite some time before either of these two digital tech players can join a group of elite stocks known as Dividend Aristocrats.

And that brings us to the "Fiscal-Cliff defense" stock that I want to tell you about today.

A New Aristocrat

This group of income-producing aristocracy is composed of about 50 stocks that have a history of increasing their dividends for 25 straight years. The list spans roughly 10 business sectors and includes companies that still have room to grow.

As luck, one of my favorite medical technology stocks was added to the list two years ago.

I'm talking about the Minneapolis-based Medtronic Inc. (NYSE: MDT), a company that I've followed for many years.

Medtronic is the world's largest independent medical technology company. About half of the company's business is devoted to heart-problem treatments. The rest is apportioned among vascular diseases, diabetes, neurological conditions, surgical technologies, and spinal care.

Not long after its founding in 1949, Medtronic pioneered the use of electrical stimulation to treat irregular heartbeats. Today it's a global firm that does business in 140 countries.

And if we peruse some of the financial metrics that I use to analyze the stocks I recommend at Strategic Tech Investor, it's clear that this is a very profitable company.

Medtronic has a profit margin of 21% and a return on stockholders' equity (ROE) of 21%. It posted a 10% increase in profits last quarter.

But given the valuation levels that we're seeking in many U.S. stocks, Medtronic's shares aren't at all pricey. With a market cap of $53.8 billion, the stock trades at $53 a share and has a forward Price/Earnings (P/E) ratio of about 13.

This stock also underscores the strength of our thesis about how high-tech dividend plays can be used to offset worrisome headlines and other troubling market developments - the "potential investing calamities" that I referenced at the start of our talk today.

And this potential calamity is Obamacare.

The pundits and other so-called "experts" predicted that this stock and others like it were going to get pole-axed by Obamacare. The reason: The new healthcare plan hits medical-device makers with a 2.3% excise tax that analysts were saying would be difficult to pass on to customers.

Instead of getting pole-axed, Medtronic pole-vaulted: Even with the market's weak August, Medtronic is up 29% year to date - or 60% better than the 18% surge of the benchmark Standard & Poor's 500 Index.

Medtronic's ability to shrug off the downer developments of Obamacare was twofold in nature.

First, the company has been adding global muscle - thereby increasing the amount of its business that's not subject to Obamacare's most onerous elements.

And, second, Medtronic took a page out of its own business plan and shocked its dividend by 7.7%. That boosted the payout to 28 cents a share - and gave the shares a comforting 2% yield.

Expect this "growth-in-business/growth-in-dividends" strategy to continue.

Here's why.

Over the next several years, Medtronic plans to greatly increase sales in emerging markets. Last year, it bought China's Kanghui Holdings, a specialist in orthopedics, a burgeoning sector in the world's most populous nation. And recent reports show that the medical-device firm has been hiring more in China.

And now that Medtronic has joined the "Dividend Aristocrats" club, expect the company to keep boosting its dividend. There's a tacit marketing value in being part of that elite group. The "aristocrat" strategy is detailed in thousands of media reports each year, money managers base strategies and paid products around it, and dividend-focused institutional investors key in on them as income stocks of the highest quality.

In the meantime, Medtronic keeps running its basic businesses with a relentless commitment to growth through innovation.

Late Monday, for instance, at the Heart Failure Society of America's 17th Annual Scientific Meeting, Medtronic announced that brand-new clinical trial results showed that heart-failure patients treated with a company-enhanced defibrillator experienced a 46% reduced risk of atrial fibrillation - a common heartbeat rate or rhythm issue.

That's a great example of why I like this company. Remember, Medtronic pioneered electrical stimulation of the heart way back in the very early 1950s - developing the core competency on which the company's future was built.

Unlike so many companies, Medtronic hasn't forgotten the fundamental know-how that first made it a leader. And by continuing to invent, and then improve on those inventions, Medtronic built itself into a great company and then added other bits of know-how along the way.

This is just one of those tech-related stocks that will magnify the value of your stake over time - and that will also pay you handsomely while you wait for that payoff.