3M Co (MMM), United Technologies Corporation (UTX): Comglomerates Provide the Best Diversification

3M Co (NYSE:MMM)How do you get the most bang for your buck in the stock market? You buy conglomerates. These mega-firms encompass multiple organizations all striving to achieve in different areas of business.

Berkshire Hathaway

How could you truly expect me to get through this article without a mention of Warren Buffett’s famed Berkshire Hathaway?

The company is engaged in so many different areas of business; it actually becomes too wild to think about. Insurance, rail, clothing, jewelry, private jets, home furniture, and even candy are among the portfolio.

If you elect to pick up the Berkshire Hathaway Inc. (NYSE:BRK.A) ‘A’ shares then you’re looking at paying around $160,000 per share. Luckily the ‘B’ shares linked above are a lot cheaper, and more than likely in your portfolio’s range.

Berkshire Hathaway Inc. (NYSE:BRK.A)’s broad horizon of companies managed to generate $162 billion in sales last year. That’s up a whole lot since 2008 when they managed to generate some $107 billion.

Net income has also been on the rise at Berkshire. In 2008, the company had a net income of $4.99 billion, and as of last year they managed to boost it to $14.82 billion.

I would make Berkshire Hathaway a part of my portfolio, despite the fact that they don’t pay a dividend. The company is well run, and by all expectations should continue to be even when Buffett steps down. Berkshire also participates in large stock buybacks every once in a while, which puts more money into our portfolios.

Growth at Berkshire is expected to be anywhere from 3-8% per year over the next couple of years.

Now To The Dividends!

Hey, Berkshire Hathaway Inc. (NYSE:BRK.A) may not pay dividends, but that doesn’t mean we have to do without. 3M Co (NYSE:MMM) is another multinational conglomerate that happens to yield investors a nice 2.4%.

3M Co (NYSE:MMM) is the name behind a variety of consumer brands, and they happen to dabble a bit in infrastructure too. They’re no doubt most familiar for Post-It and Scotch tape, but did you also know that 3M could help you with your upstream oil & gas problems? How about keeping your animal safe and healthy?

These thousands of products are helping 3M Co (NYSE:MMM) beat the market and continue down a path of earnings, and even net income growth. Five-year growth in revenues is at a steady 4.7% per year while earnings are growing at 4.1% per year over the same time frame.

Dividends are also growing at 3M Co (NYSE:MMM). Who doesn’t want that? Those dividends are growing by some 3.9% per year. That’s pretty good growth on dividends from a pretty solid company.

Analysts on the stock have growth in earnings being around 9% per year in each of the next two years. This should definitely help 3M Co (NYSE:MMM) at least keep pace with the broader market, if not beat it.

Military

Wait, military? Actually United Technologies Corporation (NYSE:UTX) generates more of their sales from divisions outside of their aircraft engine department. They also sell air conditioning units and elevators.

United Technologies Corporation (NYSE:UTX) offers the most bizarre grouping of companies in this article. Berkshire Hathaway and 3M Co (NYSE:MMM) are both so widespread that they operate almost everywhere while United Technologies are more focused on five divisions that are quite diverse in nature.

Those five different divisions are, however, doing quite well for United Technologies Corporation (NYSE:UTX). The company managed to sell $60 billion in product throughout 2012, and they generated close to $5 billion in profits from those sales.

And they are growing. The growth is at a little lower peg than some other companies out there, but let’s take a look anyway. Five-year revenue growth is at at a low rate of 1.1% per year, and EPS over that same time frame is at 4.7%.

It’s the dividend growth that really stands out at this company as over the last five years their annual payout has increased by around about 11.5% per year. They’ve actually boosted the dividend every year since 2005, that’s not too bad is it? The stock is currently yielding 2.3%, and I’d bet money that it’ll be growing soon.

Investor Takeaway

Buy them all! Each of these three companies has its own set of merits. All three, though, are projected to grow by the analysts that cover them.

If you are interested in dividends then I’d say United Technologies Corporation (NYSE:UTX) is your best buy at this point. The company has been giving their annual payout the boost since 2005, and you can hop in now before the next increase.

IF you are interested in overall diversity, Berkshire Hathaway is your go-to company.

The article Comglomerates Provide the Best Diversification originally appeared on Fool.com and is written by Ash Anderson.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 44 percentage points in 21 months Learn how!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!