Image Source: At , dividend and value expert Kelley Wright maintains a Timely Ten of his current best ideas and an annual Lucky 13 list of each year’s top recommendations. 3M Co. () appears on both of these elite lists.3M Co. is a global manufacturer with four reportable segments — Safety & Industrial, Transportation & Electronics, Health Care, and Consumer. Most 3M products involve expertise in product development, manufacturing, and marketing, with many of the company’s products involving some form of coating, sealant, adhesive, film, or chemical additive that increases the product’s overall functionality and usability for customers.3M Co. has been in a world of hurt. The stock appeared to have bottomed out in October of last year at $85.35, before it rallied to $121. Some profit taking was to be expected after such a run up in price, but when 3M guided to an EPS range in 2024 of $9.35 to $9.75 versus what analysts expected of $9.82, the stock sold off again. 3M’s guidance was impacted by one-time items, but the market didn’t take that into consideration.The bottom line with 3M is whether they can maintain their dividend while paying off the $10.3 billion settlement over the forever chemicals litigation and the $5.5 billion settlement over the faulty ear plugs. Assuming that payments start in the 2024 calendar year, MMM would be paying $1.89 billion on an annual basis over the next five years toward these settlements.Once the earplug settlement is finished in 2029, their payments would drop to $792 million annually over the next eight years to close out the forever chemical settlement. On the low end of their guidance, 3M would produce $5.18 billion in earnings in 2024, and on the high end, they would produce $5.4 billion. The $6 dividend per share eats up $3.32 billion of 3M’s earnings on an annual basis.The company would have between $1.86 billion and $2.08 billion left in retained earnings based on their 2024 guidance after all dividends are paid, and this doesn’t count the cash on hand in their balance sheet. 3M is a Dividend King, which is important to management. My guess is they will move “heaven and earth” to keep that in place.
About the Author
Kelley Wright entered the financial services industry in 1984 as a stock broker, first with a private investment boutique in La Jolla, and later with Dean Witter Reynolds. In 1990, he left the retail side of the industry for private portfolio management. In 2002, Mr. Wright succeeded Geraldine Weiss as the managing editor of the Investment Quality Trends newsletter, as well as the chief investment officer and portfolio manager for IQ Trends Private Client.His commentaries have been published in Barron’s, Forbes, BusinessWeek, Dow Jones MarketWatch, The Economist, and many other business and financial periodicals. Mr. Wright is an active speaker at trade shows and investment conferences, and is a frequent guest and contributor to radio and CNBC. He is the author of Dividends Still Don’t Lie, which was published in February, 2010, by John Wiley & Sons, Inc.More By This Author:ED: A “Dividend King” With A Generous Yield New S&P Highs Do Not Mean Stocks Are Expensive. Here’s Why…GDP Stronger…But Why? And What Does It Mean?
