Ever since I started investing - back in early 2015 - I’ve had this mental Postit note reminding me to buy one of the most venerable dividend stocks out there.
With the price of this stock coming down pretty dramatically this month, I decided to finally act on this yellow sticky reminder.
On April 24 I bought 5 shares of 3M Company (MMM) for a total of $1,014.
3M Company operates as a diversified technology company worldwide.
The company’s Industrial segment offers tapes; coated, non-woven, and bonded abrasives; adhesives; ceramics; sealants; specialty materials; purification products; closure systems for personal hygiene products; acoustic systems products; automotive components; and abrasion-resistant films, and paint finishing and detailing products.
Its Safety and Graphics Business segment provides personal protection products, transportation safety products, commercial graphics systems, commercial cleaning and protection products, floor matting, roofing granules for asphalt shingles, and fall protection products.
The company’s Health Care segment offers medical and surgical supplies, skin health and infection prevention products, inhalation and transdermal drug delivery systems, dental and orthodontic products, health information systems, and food safety products.
Its Electronics and Energy segment provides optical films; packaging and interconnection devices; insulating and splicing solutions; touch screens and touch monitors; renewable energy component solutions; and infrastructure protection products.
The company’s Consumer segment offers sponges, scouring pads, high-performance cloths, repositionable notes, indexing systems, home improvement and care products, and protective materials; and consumer and office tapes and adhesives. It serves automotive, electronics and automotive electrification, appliance, paper and printing, packaging, food and beverage, construction, medical clinics and hospitals, pharmaceuticals, dental and orthodontic practitioners, health information systems, food manufacturing and testing, consumer and office retail, office business to business, home improvement, drug and pharmacy retail, and other markets directly, as well as through wholesalers, retailers, jobbers, distributors, and dealers.
The company was founded in 1902 and is headquartered in St. Paul, Minnesota.
MMM’s current dividend yield is 2.70% – below the average 3.5% yield I strive for in building my portfolio.
The company is featured on David Fish’s list of Dividends Champions, Contenders and Challengers - boasting a 60 (!) year streak of growing dividend pay-outs.
The 5 year dividend growth is quite good, 16.45% - with last year’s dividend growth coming in at 15.74%.
It’s Current Trailing Dividend Payout Ratio however is rather high, and sits at 81%.
KMB‘s Earnings per Share (EPS) over the last five years shows a modest 4.64% increase. Projected EPS growth for the next 3-5 years is 9.30%.
The trailing 12 months Price/Earnings (P/E) is 29.84, which is higher than it’s 5 year average of 21.91. It is also higher than the industry’s 5 year average of 28.07.
EVA Dimensions (an equity research firm) states in their April 25 report that MMM‘s Performance Risk Valuation score (PRVit) score is at the 29th percentile of all firms in its industry, which leads to a recommendation to Underweight.
It adds that MMM is less attractively priced in relation to its true value
than well over half of the stocks in its industry.
Ford Equity Research projects that MMM will outperform the market over the next 6 to 12 months. This projection is based on our analysis of three key factors that influence common stock performance: earnings strength, relative valuation, and recent price movement.
The research firm has 52-Week Price Range between $191.50 - $258.63.
Finally - Jefferson Research states that MMM is showing strong Earnings Quality, Cash Flow Quality, Operating Efficiency and Balance Sheet Quality, and Valuation suggests a lower amount of price risk. When combined, MMM deserves a BUY rating.
Given MMM‘s annual dividend of $5.44 per share this purchase increased my forward annual dividend income by $27.20.