Shares of the dividend giant 3M (MMM) have surged to a buy point at 107.63, breaking out from a cup-with-handle pattern. This Minnesota-based conglomerate, known for its consistent income generation, is poised to increase its dividend for the 65th consecutive year, making it an attractive prospect for income-seeking investors.
Key Points:
- Diverse Operations: 3M operates across four segments: Safety and Industrial, Transportation and Electronics, Health Care, and Consumer. The company’s broad product base and stable business model have provided investors with reliable cash flows for decades.
- Yield and Dividend Growth: Currently yielding an impressive 5.5%, 3M is expected to boost its dividend next quarter, continuing a remarkable 65-year trend. The next ex-date is anticipated in mid-February, based on historical patterns.
- Performance Overview: Despite the robust dividend track record, 3M investors have faced challenges, with share prices declining over 11% this year and 42% over the past five years.
- Legal Challenges: The company has grappled with legal issues, including a recent $6.1 billion settlement for a 250,000-plaintiff lawsuit related to faulty earplugs. Ongoing lawsuits concerning “forever chemicals” add to the legal complexities faced by 3M, along with DuPont and other manufacturers.
- Financial Resilience: Despite legal challenges contributing to a modest price-earnings ratio of 12, 3M maintains a relatively solid financial standing, with a BBB+ debt rating from S&P Global.
- Earnings Outlook: The company is set to report fourth-quarter earnings in late January, with analysts estimating an EPS of $2.30 on revenue of $7.68 billion. While earnings per share for the year are expected to dip to $9.12 from $9.97 in 2022, a recovery is anticipated to $9.88 in 2024.
Despite legal uncertainties, 3M remains an appealing investment option, balancing the risks with a consistent dividend history and financial stability.
