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This Dividend King Has Raised Its Dividend for 60 Consecutive Years

This Dividend King Has Raised Its Dividend for 60 Consecutive Years

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Thursday, 30 August 2018 09:35 AM Current | Bio | Archive

The Dividend Kings are a select group of stocks that have raised their shareholder dividends for at least 50 years in a row. Maintaining a streak of annual dividend increases for a half-century is no easy task. Therefore, it should come as no surprise that the list of Dividend Kings is relatively short.

There are just 25 Dividend Kings in the entire stock market. Industrial manufacturer 3M Company (MMM) is a Dividend King, with a very impressive dividend track record. It has paid dividends to shareholders for over 100 years, and it has raised its dividend for 60 years in a row.

Manufacturing Steady Growth Over Time

3M. It dates back to 1902, when it was just a small mining venture. Back then, the company was known as Minnesota Mining and Manufacturing. Today, 3M is an industrial manufacturing giant with annual revenue of $32 billion. It has a presence in multiple end markets including industrial manufacturers, safety products, electronics, healthcare, energy, and consumer products.

With a global footprint and a diversified portfolio, 3M is benefiting from steady global economic growth. Total revenue increased 7.6% over the first half of 2018. Organic revenue, which excludes the impact of foreign exchange, increased 4.3% in that time. All business segments reported growth over the first six months, with Safety & Graphics leading the way with 7.7% organic growth.

3M also has a diversified geographic presence, with a significant exposure to the emerging markets. This is a particularly attractive growth catalyst for the future, as the emerging markets are seeing economic growth above that of developed markets. For example, organic revenue increased 5.1% in the Asia-Pacific region over the first half of the year, while revenue rose 4.8% in Latin America.

3M’s steady growth has allowed the company to raise its dividend each year for six decades running.

An Industrial-Strength Dividend Payout

3M has increased its dividend for 60 years in a row, including a strong 16% increase on January 25th. The stock has a current dividend yield of 2.6%, which is above the average dividend yield in the S&P 500 Index. And, 3M’s dividend is highly secure. 3M’s current annualized dividend payout of $5.44 per share is easily covered by underlying profits. At the same time, the company expects to generate adjusted earnings-per-share in a range of $10.20 to $10.45 for 2018. Therefore, 3M is likely to have a dividend payout ratio of 52%-54% for 2018. This is a highly secure payout with room for growth.

Investors can reasonably expect 3M to increase its dividend each year at a mid-to-high single digit range over a full economic cycle, with higher dividend increases during economic expansions, and smaller increases during recessions. As a global industrial manufacturer, 3M is not immune to recessions. However, the company has a unique ability to remain highly profitable each year, even during recessions, despite the fact that it operates a cyclical business model.

During the Great Recession, 3M’s earnings-per-share declined 13% in 2008, and 7.5% in 2009. However, the company remained highly profitable during this time, and continued to raise its dividend. 3M bounced back with 27% earnings growth in 2010, as the global economy recovered from the recession.

3M has a very strong brand, an above-average dividend yield, and its future growth potential should easily allow for continued dividend increases for many years to come.

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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BenReynolds
Industrial manufacturer 3M Company (MMM) is a Dividend King, with a very impressive dividend track record. It has paid dividends to shareholders for over 100 years, and it has raised its dividend for 60 years in a row.
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2018-35-30
Thursday, 30 August 2018 09:35 AM
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