Our analysis is based on comparing 3M Co. with the following peers – Danaher Corporation, Honeywell International Inc., General Electric Company, Illinois Tool Works Inc., Johnson Controls International plc, Johnson & Johnson, DENTSPLY SIRONA, Inc., Amazon.com, Inc., HP Inc. and Apple Inc. (DHR-US, HON-US, GE-US, ITW-US, JCI-US, JNJ-US, XRAY-US, AMZN-US, HPQ-US and AAPL-US).
3M Co.’s dividend yield is 2.91 percent and its dividend payout is 54.47 percent. This compares to a peer median dividend yield of 1.99 percent and a payout level of 34.81 percent. This type of dividend performance might make it a good stock for dividend investors. In addition, the company’s relatively good dividend quality score of 67 out of a possible score of 100 points to some sustainability of its robust payout ratio, and underscores its attractiveness for dividend investors seeking current income.
Dividend Quality Overview
- Over the last twelve months (prior to March 31, 2017), MMM-US paid a high quality dividend, which represents a yield of 2.31% at the current price.
- Dividends paid during each of the last five years were consistently of high quality.
- The ending cash balance is less than the last full year dividend payment and cannot be relied on to cushion any significant reduction of cash flows in the future.
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Over the last twelve months (prior to March 31, 2017), MMM-US paid a high quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 2.36x), investing cash flow (coverage of -0.45x), issuance cash flow (coverage of -0.61x) and twelve-month prior cash (coverage of 0.56x), for a total dividend coverage of 1.85x.
MMM-US‘s issuance cash flow includes outflows from net share buybacks (coverage of -0.91x). Thus, the total coverage including share buybacks is 2.76x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.
|Dividend Yield (%)||2.56||1.86||2.12||2.79||2.51||2.91|
|Dividend Payout (%)||37.34||37.8||45.66||54.09||54.41||54.47|
A complete list of metrics and analysis is available on the company page.
3M Co. is a diversified technology company, which manufactures industrial, safety and consumer products. The company operates its business through the following segments: Industrial, Safety & Graphics, Health Care, Electronics & Energy, and Consumer. The Industrial segment provides products, including tapes, abrasives, adhesives, specialty materials and filtration systems to diverse markets from purification to aerospace. The Safety & Graphics segment offers personal protective equipment, traffic safety & security products, commercial graphics systems, commercial cleaning & protection products, floor matting, roofing granules for asphalt shingles, and fall protection products. The Health Care segment supplies medical and surgical equipment, skin health & infection prevention products, drug delivery systems, dental & orthodontic products, health information systems and food safety products. The Electronics & Energy segment offers optical films solutions for electronic displays, packaging and interconnection devices; insulating and splicing solutions; touch screens and touch monitors; renewable energy component solutions; and infrastructure protection products. The Consumer segment provides sponges, scouring pads, high-performance cloths, consumer and office tapes, repositionable notes, indexing systems, home improvement products, home care products, protective material products, and consumer & office tapes, as well as adhesives. The company was founded by Henry S. Bryan, Hermon W. Cable, John Dwan, William A. McGonagle and J. Danley Budd in 1902 and is headquartered in St. Paul, MN.
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