3M Co (NYSE:MMM) has a history of success. It had gross margin of 47.6% and pays out a modest 37.4% of its earnings to support a 2.3% dividend yield. 3M has paid over $14 billion in dividends to shareholders over the past decade. The company has raised its dividend from $2.04 in 2009 to $2.54 in 2013, and is aiming for a 40% dividend payout ratio over the long-term.
In addition to a generous dividend policy, 3M has authorized a $7.5 billion buyback program with the option to double it to $15 billion by 2017. These share repurchases will add 1% to 2% to EPS growth annually.
Foolish bottom line
Automotive companies are typically boom and bust depending on consumer spending cycles and general health of the economy. The Valspar Corporation (NYSE:VAL) and 3M Co (NYSE:MMM) offer a more balanced exposure to the increasing amount of spending on vehicles. 3M stands to benefit the most from the trend of older vehicles on the road. All three companies stand to benefit from rising sales overseas, and should continue to do so as more and more Asian consumers hit the road.
Wes Patoka has no position in any stocks mentioned. The Motley Fool recommends 3M and Ford. The Motley Fool owns shares of Ford.
The article Ways to Profit From the Automotive Industry originally appeared on Fool.com.
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