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Keep Your Expectations In Check For 3M Company

Jan. 23, 2017 9:38 AM ET3M Company (MMM)6 Comments
Passive Income Pursuit profile picture
Passive Income Pursuit


  • 3M Company is a Dividend Champion with 58 consecutive years of dividend growth.
  • 3M is a one stop diversification shop with exposure to just about every sector of the economy and the globe.
  • There's a difference between a quality company and a quality investment.

3M Company (NYSE:MMM) has long been a favorite for dividend growth investors and there's a lot to like about the company. Many people know 3M as the maker of the Post It Note and Scotch Tape; however, they're much more than that.

Over the last year 3M generated over $30 B in revenue across their 5 business segments. 3M operates in the consumer space, electronics & energy, health care, industrial and safety & graphics. The great thing about 3M is that they have exposure to just about every economic sector and sub-sector imaginable. So when one business segment falls on hard times, such as the energy segment for the last year or so, the others are there to pick up the slack. Essentially when one or two operations are zigging the others are zagging. This has afforded 3M the ability to continue to grow over time since it's very rare to see every business segment struggle at the same time.

As a diversified technology company their moat firmly falls into the patents/secrets category. The secrets/patents moat style is one of my favorites because there is legal protection of the business from competitors.

While there's a lot to like about 3M the company that doesn't necessarily mean that 3M the stock would make a good investment at these prices.

Dividend History

One of my favorite quick screens to narrow down the universe of quality companies is to look at their dividend history. A company won't just haphazardly find themselves in the midst of a decades long streak by accident. Rather it takes a quality company with some kind of intrinsic characteristic that defends the business model and management that's willing to reward shareholders along the way. This doesn't mean the future will look like the past; however, sticking with companies that have a proven track record

This article was written by

Passive Income Pursuit profile picture
I started a dividend growth investment strategy a few years ago and am aggressively growing my portfolio to churn out enough dividends to reach financial independence.

Analyst’s 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.

I am not a financial professional. Please consult an investment advisor and do your own due diligence prior to investing. Investing involves risks. All thoughts/ideas presented in this article are the opinions of the author and should not be taken as investment advice.

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Comments (6)

MMM--"great company but overvalued." How many times do we hear that same old tired refrain.

Pretty simple: it's overvalued because it's great. Rarely is it undervalued. Just look at the 5, 10, and longer charts. Buy MMM with a long-term mindset, and chances are really good you'll be handsomely rewarded with both persistent share price rise and regular dividend increase.

Retired income/dividend-growth investor
Depends if a base case scenario of 6-7% (albeit a relatively safe 6-7%) return is your investing goal. Love the company but agree with the comments above. Can't get caught chasing in a market whose p/e's are above the mean... unfortunately I'll have to pass for now
I do this for a living, "Retired" at 40 to run my small farm. my YOC on MMM is closing in on 7%, And Growing, not to mention the Asset Appreciation over the years (around 85%) so, why would I, anyone sell?
Do you do this for a living, or is it just a hobby? Buy and hold 3M and rake in the dividends! I believe 3M is due for a dividend hike in Feb. I'll be sure and check on the beach on St. John's! Now go get some sun/exercise!

at which levels would you consider selling the pieces you own in 3M, when you see the valuation as too rich?

KeithX profile picture
I will simply say that I agree with your conclusion, and that is why I sold half of our shares of MMM last week. will look to buy if the price gets down under $150.
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