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The 3M 3Q17 Story: Dividend, Ratings, and Valuation

PART:
1 2 3 4
The 3M 3Q17 Story: Dividend, Ratings, and Valuation PART 1 OF 4

The Facts on 3M’s 3Q17 Dividend

3M to pay 3Q17 Dividend

On September 12, 3M (MMM) will pay a dividend of ~$1.18 per share. Investors holding the stock on or before the record date of August 25, 2017, are eligible to get that dividend.

MMM is one of the longest dividend-paying companies, with a history of paying an uninterrupted dividend for 100 years.

The Facts on 3M&#8217;s 3Q17 Dividend

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Dividend growth

MMM’s dividend of ~$1.18 per share represents a rise of 5.9% on a YoY (year-over-year) basis. For fiscal 2017, MMM is expected to pay $4.70 per share. Over the past five years, MMM’s dividend has grown at a CAGR (compound annual growth rate) of 14.8%.

3M’s free cash flow

Free cash flows are very important for companies to finance their future growth, to repay their debts, and for dividend payments. At the end of 2Q17, MMM had generated free cash flow of $2.04 billion. It expects its free cash flow for fiscal 2017 to be in the range of $5.0 billion–$5.5 billion.

Since 2012, MMM’s free cash flow per share has grown at a CAGR of ~11.8%. But its growth of free cash flow per share has been lower than its dividend growth—not an ideal situation because a higher portion of free cash flow will have to be diverted toward dividend payments while less will be available for future expansion.

Investors can hold 3M stock indirectly by investing in the SPDR Dow Jones Industrial Average ETF (DIA), which has 6.5% of its portfolio in MMM. Other holdings of DIA include Boeing (BA), Goldman Sachs (GS), and Apple (AAPL), with weights of 7.6%, 7.1%, and 5.1%, respectively, as of August 23, 2017.

In the next part, we’ll look into MMM’s dividend yield.

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