3M (way before it was called the Minnesota Mining & Manufacturing) might not be the most iconic corporation, however it is one of the largest in the US, in fact they are one of the few companies actually in the DOW Jones. 3M has been an incredibly innovative company since its humble beginnings, currently it holds over 118,000 patents. They are involved extensively in industry, worker safety, US health care, and consumer goods, producing over 60,000 different products, and operating in over 70 countries.
So why own the stock?
This is going to come down to your investing preference. If you prefer dividend growth investing, that is, investing into companies that have continuously increased their dividend payout to more quickly compound your dividend reinvestments, then this will definitely be up your alley. If you more prefer growth stocks, well MMM is unfortunately well past its years for growth, especially when compared to the tech companies.
So for investors looking to add this dividend stock, what makes MMM a dividend king? Well…
- It has paid out dividends to its holders for over 100 years
- It has increased that dividend for 62 consecutive years.
- The growth rate of that dividend has been 10.99% over the last 5 years alone.
- The dividend payout ratio is a very healthy 72.95%,
- Lastly, the current dividend yield is 3.68%, setting its current payout to $5.88 a year per share.
- Consistent and strong revenue/income and a debt ratio of only 0.46.
- COVID ofcourse has impacted their income, however their healthcare involvement has buffered the loss across their other sectors. The ongoing increases do ofcourse present a risk, but that is the same for every stock.
- Many firms and analysts have marked 3M as undervalued below the ~$180 mark, citing discounted cash flow and margin/return-driven EV/EBITDA (Enterprise Value/Earnings Before Interest, Taxes, Depreciation & Amortization)
This was just a quick post to get the brain juices going, so please do your research to supplement the brisk points mentioned above.
This post is probs going to come more down to individual investing philosophy, but those comment are always interesting to read so they are more than welcome! Each different type of investor can learn from the other, dividend vs index vs growth or otherwise. Anyways, have a good day everyone!
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.