So far, it's been a solid year for shareholders of Covidien ( COV). In 2012, shares of the medical device and pharmaceutical firm have rallied more than 25%, besting the broad market by a wide margin. Covidien is a leader in most of the areas that it operates in, focusing on niche medical products (like bariatric bands and instruments for minimally-invasive surgery) rather than trying to compete with the industry's bigger names. That's part of the reason why COV is spinning off its pharmaceutical business right now. Pharma has been under some significant pressures in the last couple of years, as investors cringe over the loads of patent cliffs plaguing drug revenues. By spinning off pharma, Covidien can shove any discount to its share price onto a new firm. At the same time, spin offs generally unlock considerable value for shareholders. That bodes well for folks who own COV right now. >>5 Biotech Stocks Under $10 Blasting Higher More permissive healthcare legislation here at home bodes well for Covidien. With more patients able to pay for the types of treatments that the firm focuses on, sales should move higher in COV's fastest growing segment (the U.S.). COV currently pays out a 22.5-cent quarterly dividend. While only a 1.6% yield at current price levels, this stock looks capable of hiking its dividend in the next quarter.