There are dividend aristocrats, then there are companies in a whole other category: Dividend Dynasties. MMM is exactly one example of those companies. Always predictable, always reliable. The stuff dreams are made of. It’s also part of my 5 stock portfolio for beginners.
Last week MMM extended its streak of consecutive dividend increases to 59 straight years, and its streak of consecutive years with a dividend payment to 100 years. 2017 sees 3M giving shareholders a 5.86% increase to the dividend, bringing the new quarterly amount to $1.175 from last years $1.11. This increase does fall short of my projected 9 cent or 8.11% increase for the year. Factoring in the new dividend payment, MMM has a current dividend yield of 2.63%.
A Look at the Dividend History:
I fully intend to go back as far as possible and add more to 3M’s dividend history. But for now, looking back at the 15 year time frame, 2003-2017, we see MMM has averaged a dividend growth rate of 9.79% during the time frame. The dividend hikes have taken effect for the companies Q1 dividend, so the annual payout has grown at the same 9.79%. This rate of growth equates to dividend income more than tripling to the tune of 256% over that 15 years period. That far outpaces inflation and is much higher than wage growth.
MMM vs S&P500
Thankfully there’s more to MMM than just the growing dividend. Looking at performance over the past decade, we see that MMM has just over doubled the performance of the S&P500. There’s a reason MMM is used as an example in business school of a well oiled machine, plenty of product innovation to drive future growth.
Market Cap: $108 Billion
PE Ratio: 23.10
Dividend Yield 2.63%
Payout Ratio: 54.85%
Profit Margin: 16.77%
Cash: $2.68 Billion
Debt: $11.65 Billion
Not to sound like a broken record, but the PE is a little high (like many stocks today in this market). Payout ratio allows for more years of dividend growth. Nothing really jumps out at me here.
3M isn’t the most exciting company when you look at them from the surface. But digging in and seeing that impressive streak of 59 years straight for dividend increases allows an investor to slowly but surely build a nice and steady stream of dividend income. Sure you can probably hold out and pick up MMM a few bucks cheaper in the upper 170s, but there’s still good and steady upside to this stock.Follow me on the social medias: