In the beginning of this New Year, many investors review their portfolios. We all hope for a good year on the market and, most importantly, steady dividend growth increases among our portfolio. I selected three companies I think will perform well in 2017 and will increase their dividend payouts.
3M Co (NYSE:MMM)
3M Co (NYSE:MMM) produces products like Scotch tape, projector systems, Post-it notes, Tartan track, and Thinsulate. This is a conglomerate that produces products for many industries and for both personal and business use, and their manufacturing, research, and sales offices are all over the world.
3M shows all the right characteristics to be part of a dividend growth portfolio. It is a leader in many of its products and spends more than any of its competitors in R&D. This makes 3M a chief of innovation that is always a few years ahead of the competition. By improving its existing products and generating new ones, 3M ensures it will grow its revenue over time.
The company also has strong experience in making several “small” acquisitions throughout the years and integrating them perfectly into its strong business model. Finally, 50% of its revenue is coming from repetitive sales, generating a never-ending source of cash flow.
There isn’t much risk associated with 3M besides the fact that its growth in the upcoming years may not be spectacular. This is not a company to buy in the hopes of it showing double-digit returns, but this is a company you can buy and sleep well at night.
Dividend Growth Perspective:
3M Co (NYSE:MMM) has been paying dividends to its shareholders for over a century and shows more than 50 consecutive years of increases. Over the past couple of years, 3M has been even more generous with its dividend increases and the payout ratio has jumped to 54%. Still, there is plenty of room for management to increase it in the future.
3M’s competitive advantages are legendary. Industrial clients are reluctant to abandon such a world class company for any competitors, as they know 3M will deliver quality products. Consumers continue to buy post-its again and again, as the product is well designed, well known and, most importantly, works perfectly. 3M shows one of the strongest business models among the dividend kings and its dividend growth potential will continue to be one of its most interesting characteristics for investors.