Over the course of the last several weeks, we have rebalanced our portfolio to achieve several goals.
- Take some profits
- Add more shares to several existing positions
- Open up new positions that help round out our portfolio
Our portfolio now consists of; Exxon Mobil (XOM), Johnson & Johnson (JNJ), AT&T (T), General Electric (GE), Annaly Capital (NLY), Southern Company (SO), Procter & Gamble (PG), Intel (INTC), Realty Income (O), Coca-Cola (KO), Bank of America (BAC), American Capital Agency (AGNC), Intel Wal-Mart (WMT), and Cisco (CSCO).
As of the last review, our portfolio had increased by roughly 24% over nine months and has eclipsed the S&P by more than 10%. With one week left to go this month, it should be interesting to see how we have faired over a somewhat volatile summer.
Let's Add Another Mega Cap Blue Chip Dividend Winner
I have written often about General Electric and how I feel that this stock could be my stock pick for 2013 but we have plenty of time to "crystal ball" that opinion. For now, we need to focus on adding another dividend winning stock that fits the mega size criteria that we embrace.
3M Company (MMM) not only fits that criteria, but in my opinion fits all of the criteria we as dividend investors seek. Let's look at some of the facts.
- The company has surpassed American Express (AXP) for #42 of the largest companies around.(Here is the report)
- It missed the YOY revenue growth by about 2%, but increased earnings YOY by about 1%, and beat estimates.
- The enterprise value is around $65 billion.
- It has roughly $5 billion available in operating cash.
- It currently has a 2.70% dividend yield (which has increased for over 10 consecutive years).
- A very low payout ratio of 37%.
By looking at the following chart, we can see a company that is not only enormous and powerful, but VERY shareholder conscious as well.
Dividend "raises" for at least 10 consecutive years. Significant increases in shareholder equity supported by increased profits as well as increased profit margins (what the market will bear anyway). All of this while continuing to grow their overall business.
Very impressive indeed.
What About The Future
Well without doing too much prognosticating, we can just take a look at some of their recent technological advances, and patents, to see that the MMM pipeline is continuing to advance.
"Seaming Cylinder Spray Adhesive" has already been launched, and this advancement can set a new gold standard in geotextile bonding. Since I was in the textile business, I happen to know the value of this fast setting adhesive type, which will save time and money.
As noted in the announcement:
"The adhesive is an extremely versatile, fast-tacking construction-grade spray adhesive with a unique wide-web spray pattern, ideal for bonding geotextile fabrics. With this innovative solution, installers of geotextile fabric can see time-savings of more than 56 percent compared to sewing."
Another advancement is in the waste recycling business segment of 3M. A chemical called PTFE is used in breaking down materials for full use value but does exude environmentally unfriendly and costly waste itself.
Now, 3M has designed a facility to actually recycle the "recycler", cutting costs dramatically, and reducing or eliminating adverse affects on the environment.
"In the new process, PTFE waste materials will be heated in a reactor, split into their raw gaseous components, cleaned and fed back into the production of new PTFE, without any negative impact to product quality. The potential for environmental benefit is enormous. Experts estimate that 20,000 metric tons of waste are created annually during the processing of PTFE globally. This waste material is currently either thermally degraded or land filled in special landfills at a cost to the processor.
When running at full capacity, the process is estimated to save 10,000 metric tons of waste hydrochloric-acid, 7,500 megawatt hours of energy and subsequently 7,500 tons of CO² emissions from being released annually into the atmosphere."
Several new patents have also been registered as noted in this article, as well as in this article. Both advances in technology are not as far along, but the point is that the pipeline is buzzing, and the products and facilities that have already been launched, means more revenues, more profits, and probably more dividends for their shareholders.
3M has everything a dividend growth investor seeks. The quality of the company speaks for itself, and I feel our "Team Alpha" portfolio (as well as my own) can benefit by adding shares of this company, today.
Read more here.