3M In A Perfect Position To Perform In A Raising Interest Rate Environment

Sep. 29, 2015 1:58 PM ET3M Company (MMM)12 Comments
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The Dividend Guy
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Summary

  • 3M Co is one of the rare international companies posting increasing revenue regardless of the strong US dollar.
  • The company's pristine balance sheet won’t be affected by future interest rate increases.
  • 3M's impressive budget for R&D gives them a big competitive advantage.

DSR Quick Stats

Sector: Industrial

5 Year Revenue Growth: 6.59%

5 Year EPS Growth: 10.63%

5 Year Dividend Growth: 10.89%

Current Dividend Yield: 2.81%

What Makes 3M Co (NYSE:MMM) a Good Business?

We all use Scotch Tape and you probably heard that funny story about how Post-it stickers were invented by mistake (a tech lab worked on a different type of glue that wasn't sticky enough… but worked perfectly for pieces of paper you want to put here and there). However, MMM is a lot more than daily sticky products - the company is divided into five segments:

Source: author's graphics

Industrial Business (34%):

This is the largest segment in term of sales. This division provides adhesives, abrasives, filtration systems, fasteners and specialty materials to a variety of industries.

Safety and Graphics (18%):

This business offers films, reflective materials, projection systems, and the like. I bet you didn't know much about this part of 3M Co, right?

Electronics and Energy (17%):

This is 3M biggest business operation in Asia with two-thirds of its revenue coming from this region. Electronics and Energy provides products for electronics and energy businesses including films for LCD screens and splicing products for signal cables.

Healthcare (17%):

The Healthcare business focuses on products offered to more developed countries such as the US and Europe. It makes products in the areas of wound care, oral care, drug delivery systems, etc.

Consumer and Office (14%):

This is probably the division we know best as consumers - 3M offers a variety of home office products in developed countries. Over half of this segment revenues are coming from the US.

Ratios

Price to Earnings: 18.28
Price to Free Cash Flow: 17.60
Price to Book: 6.682
Return on Equity: 33.82%

Revenue

Revenue Graph from Ycharts

MMM is one of the rare international companies showing

This article was written by

The Dividend Guy profile picture
31.24K Followers
My name is Mike and I’m the author of The Dividend Guy Blog & The Dividend Monk along with the owner and portfolio manager here at Dividend Stocks Rock (DSR). I earned my bachelor degree in finance-marketing, own a CFP title along with an MBA in financial services. Besides being a passionate investor, I’m also happily married with three beautiful children. I started my online venture to educate people about investing and to be able to spend more time with my family. I started my career in the financial industry back in 2003. I earned several promotions along with a good pile of diplomas. I had lots of fun working with clients in private banking for half a decade, but thought I could do more with my life. In 2016, I decided to take a leap of faith and left everything behind to travel across North America and Central America with my family. We drove through nine countries and stayed three months in Costa Rica before returning home. This was an eye-opening adventure that led me in 2017 to quit my job in the financial industry and pursue my dream; helping others with their personal finance through my investing websites. You just found the reason why I quit my suit & tie job!

Disclosure: I am/we are long MMM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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