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3M: Be Prepared For Double-Digit Annual Returns And Double-Digit Dividend Hikes

Published Thu, 06 Dec 2018 21:53:07 -0500 on Seeking Alpha

3M (MMM) has lost 22% since it peaked early this year. Consequently, it has underperformed the market by a wide margin, as the S&P has remained essentially flat over the same period. While the recent performance of the stock has disappointed its shareholders, investors should realize that the stock is likely to offer double-digit annual returns in the next five years while it will probably continue to raise its dividend at a double-digit rate.
Business overview
3M was founded in 1902 as a simple mineral company but, thanks to its innovation, it has become a unique gigantic company. It operates in 70 countries and sells more than 60,000 products to homes, businesses, schools, hospitals and other industries in more than 200 countries. Despite the numerous products that comprise its portfolio, 3M generates a third of its total sales from products invented within the last five years. This is an exceptional achievement, which confirms the highly innovative character of the company.
Dividend record
3M belongs to the best-of-breed group of dividend kings. It has paid a dividend for more than 100 consecutive years and has raised its dividend for 60 consecutive years. This is a very rare record, as only 7 other companies have achieved such long dividend growth streaks. The impressive consistency is a testament to the strength of the business model of 3M and its exemplary execution.
Even better, the company has been raising its dividend at a fast pace. To be sure, it has... Read more