Is 3M Co (MMM) a Good Stock to Buy?

Page 1 of 2

No discussion of industrial stocks with long histories of financial dominance is complete without 3M Co (NYSE:MMM), formerly known as Minnesota Mining and Manufacturing. This Dow Jones Industrial Average component is the gold standard for dividend stocks.

3M Co (NYSE:MMM)

3M Co (NYSE:MMM) doesn’t often get much attention in the financial media. But industrials such as 3M play an important role in society, and this company in particular has a long and proud history of success. Investors looking for slow-and-steady growth and reliable dividends would be wise to consider 3M, but after a strong rally over the past several months, is now the time to buy?

Compelling shareholder returns

One of the best reasons to own 3M Co (NYSE:MMM) is its long-held policy of returning large portions of its cash flow through to shareholders via dividends and buybacks. Even better, 3M has a long track record of increasing the levels of these rewards on an annual basis.

In February, 3M Co (NYSE:MMM) announced it will increase its dividend by 8%. Not only that, but the company also announced it had authorized a $7.5 billion stock buyback program. The dividend raise marked the 55th consecutive year of dividend increases. Furthermore, 3M has paid uninterrupted dividends to shareholders for an amazing 96 years in a row. Over the past ten years, the company has returned $32 billion to shareholders through a combination of dividends and share repurchases, or 89% of reported net income.

It’s worth noting that 3M Co (NYSE:MMM) isn’t the only diversified industrial that treats its shareholders well. Diversified global industrial manufacturer Dover Corp (NYSE:DOV) has an impressive track record itself. Last year, the company raised its dividend 11%, representing the 57th consecutive year of a dividend increase. That record is the fourth-longest streak of dividend increases of any publicly listed company according to Mergent.

Of course, no company can maintain this kind of streak without the supporting underlying fundamentals, which Dover Corp (NYSE:DOV) has.  Dover’s full year 2012 revenue and diluted earnings per share from continuing operations climbed 10% and 11%, respectively, versus the prior year.

Another diversified industrial with a similarly long history of dividend growth is Emerson Electric Co. (NYSE:EMR), which last raised its dividend in the fall of 2012. Emerson has a fantastic track record of raising its dividend for 55 consecutive years.

That being said, investors may have been disappointed by Emerson Electric Co. (NYSE:EMR)’s last dividend bump. Emerson increased its dividend by just one penny per share last year, amounting to just a 2.5% increase.

Great businesses in the industrial space

Companies within the industrial sector don’t have exciting businesses. They aren’t likely to be featured in the financial media as the next hot sector or major growth story. At the same time, they provide necessary functions to our society. They manufacture and distribute real, tangible things that build our very infrastructure and contribute heavily to the economy.

3M, Dover, and Emerson Electric are all well-run, extremely profitable businesses. While we can quibble with their valuations, certainly a valid concern with each of these stocks trading for more than 17 times earnings, you can’t argue with the quality businesses these blue-chips operate.

That being said, I’d consider 3M, as well as Dover and Emerson to be solid holds. They aren’t screaming bargains and have rallied significantly in recent months. To illustrate, consider that these stocks’ dividend yields have fallen below 3% annualized.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Click here to Read Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 74 percentage points in 2.5 years. Our beta is only 1.2 (download a FREE newsletter and see the details inside)

Lists

Best Selling Magazines in the World

Shortest People in History

The Most Celebrated Holidays in the World

Most Expensive Handbag Brands in the World

Top Selling Comic Book Issues of this Century

The Most Powerful Women in Politics

Best Paid DJs

Most Rebellious Female Artists

Best Paid TV Actresses of 2014

Best Paid Actors of 2014

Most Expensive Horses in the World

Tallest People Ever

Most Encouraging Feminist Celebrities

Best Paid Supermodels of 2014

Top 10 Suburbs for Retirement in 2015

10 Wealthiest Cities in America

Top 10 TED Talks for Entrepreneurs

Best TED Talks on Education

25 Most Dangerous Places to Live in America

Top 10 Ski Resorts in the United States – 2014 List

Top 10 Most Remote Places in the World

Most Visited Museums in the United States

Wealthiest Photographers in the World

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!