Tags: 3m | dividend | payout | raise

Dividend Aristocrat 3M Poised to Raise Payout Again

3m corporate logo symbol emblem on computer pad screen

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By Friday, 18 January 2019 04:54 PM Current | Bio | Archive

Investors looking to fill their portfolio with high-quality stocks should focus on dividend growth companies with long histories of raising their dividends. For example, the Dividend Aristocrats are a group of 53 stocks in the S&P 500 Index with at least 25 consecutive years of dividend increases. There is an even more exclusive group than that, the Dividend Kings, which have raised their dividends for 50+ years in a row.

Only the best dividend stocks make it to being a Dividend King. With Industrial manufacturer 3M Company (MMM) is a Dividend Aristocrat and a Dividend King. It has paid a dividend to shareholders for over a century, and it has increased its dividend for 60 consecutive years. 3M is likely to raise its dividend again when it reports fourth-quarter earnings.

Business Overview And Recent Results

3M is a diversified manufacturing company. It has exposure to virtually all sectors of the economy. The company sells more than 60,000 products that are used every day in homes, hospitals, office buildings and schools around the world. 3M serves customers in more than 200 countries.

3M is composed of five separate businesses. The Industrial division produces tapes, abrasives, adhesives and supply chain management software and solutions. Safety & Graphics products include protective gear and security products. The Healthcare segment supplies medical and surgical products as well as drug delivery systems to customers. The Electronic & Energy division produces fibers and circuits, while the Consumer division sells office supplies, home improvement products, protective materials, and stationary.

The operating climate became more difficult for 3M as 2018 drew to a close. 3M released a disappointing third-quarter earnings report. 3M missed analyst estimates for revenue and EPS. Revenue declined 0.2% for the quarter, but EPS rose 11% from the same quarter a year ago. The Safety & Graphics was the lone division to show sales growth.  This division saw strength in commercial solutions and personal and transportation safety.  Industrial revenues were flat, while Healthcare revenue declined 3%, Electronics & Energy declined 5%, and Consumer product sales declined 3%.

Despite the difficult third quarter, 3M still expects 2018 to be another year of growth. For the full year, 3M expects 3% organic sales growth. The company expects EPS of $9.95 for the year. This will be enough growth to allow the company to raise its dividend.

Manufacturing Dividends For Shareholders

3M currently has an annualized dividend payout of $5.44 per share. It has paid the same quarterly dividend of $1.36 per share for the past four quarters. To continue its amazing dividend streak, the company will likely raise its dividend when it reports fourth-quarter earnings, as it did last year. In 2018, 3M raised its dividend by 16%, and even though growth slowed down a bit to end the year, the company should still pass along another healthy raise.

3M had a payout ratio of approximately 55% in 2018. This is a modest payout ratio that leaves plenty of room for the company to raise the dividend again for 2019. A dividend increase in the high-single digits is likely, with the potential for a 10%+ hike if the fourth quarter earnings report shows recovery from the third quarter.

Ben Reynolds is CEO of Sure Dividend. Sure Dividend helps individual investors build high quality dividend growth stock portfolios for the long run.

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A dividend increase in the high-single digits is likely, with the potential for a 10%+ hike if the fourth quarter earnings report shows recovery from the third quarter.
3m, dividend, payout, raise
Friday, 18 January 2019 04:54 PM
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