The company has paid increasing dividends for 57 consecutive years. The company’s long dividend streak makes it one of only 17 Dividend Kings – dividend stocks with 50+ years of rising dividends.
Among the investors tracked by Insider Monkey, 42 funds held shares of 3M at the end of the third quarter of 2015, versus 40 funds a quarter earlier. These funds amassed 2.20% of the company’s outstanding stock at the end of September. Edgar Wachenheim’s Greenhaven Associates and Cliff Asness’ AQR Capital Management held substantial positions in 3M at the end of September, reporting 2.25 million shares and 924,749 shares, respectively, in their last 13F filings.
Despite its long history of success, 3M has faced headwinds recently. The strong United States dollar combined with a global growth slowdown has sent 3M stock down 14% in the past year.
The sell-off has caused 3M’s dividend yield to rise to nearly 3%. The opportunity to pick up 3M stock at ~3% yields has only come during large sell offs in the last 20 years as the company’s dividend yield history image below shows:
Note: The red line shows 3% dividend yield
Getting To Know 3M
3M is one of the largest diversified manufacturers in the world. 3M’s market cap versus its largest competitors’ market caps is shown below for comparison:
– General Electric (GE) has a market cap of $285 billion
– 3M has a market cap of $86 billion
– Honeywell (HON) has a market cap of $75 billion
– Danaher (DHR) has a market cap of $58 billion
– ABB (ABB) has a market cap of $39 billion
– Illinois Tool Works (ITW) has a market cap of $30 billion
– Eaton (ETN) has a market cap of $22 billion
3M Co (NYSE:MMM) is the second largest publicly traded corporation in the diversified machinery industry.
3M operates in 5 segments. Each segment’s percentage of total operating income generated for 3M through the first 9 months of fiscal 2015 is shown below:
– The Industrial segment generated 31% of total operating income
– The Safety & Graphics segment generated 18% of total operating income
– The Health Care segment generated 22% of total operating income
– The Electronics & Energy segment generated 16% of total operating income
– The Consumer segment generated 14% of total operating income
The industrial segment is 3M’s largest based on operating income. The segment produces: adhesives, abrasives, tapes for industrial purposes, filtration systems, specialty additives, auto body repair solutions, and car DIY kits.
The safety and graphics segment produces respiratory, hearing, and eye protection solutions. It also creates reflective signs for traffic direction, ID cards like passports, roofing material, and building and architectural design safety solutions.
The health care segment produces skin and wound care products, infection prevention products, oral care, drug delivery inhalation systems, and coding and reimbursement software, among other health related products.
The company’s electronics and energy segment produces electrical vinyl rubber, flexible circuits, insulation tapes, and fiber and copper splicing, among other products.
The fifth and final consumer segment generates the least revenue for 3M, but is also the most familiar to US consumers. The consumer segment produces tape, home air filtration products, and Post It notes, among other products.
3M is diversified by product type as well as by geography. It is rare to find a company that can be so profitable in so many diverse industries.
3M’s broad success combined with its impressive dividend history shows clear evidence of a strong and durable competitive advantage.