Shares of dividend stock 3M (MMM) have hit a 107.63 buy point after breaking out from a cup-with-handle pattern. For investors chasing income, the Minnesota-based conglomerate — already yielding 5.5% — is set to raise its dividend next quarter for the 65th straight year.
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3M is a diversified manufacturer that operates through four segments: Safety and Industrial, Transportation and Electronics, Health Care and Consumer.
A broad product base and stable business have allowed 3M to provide investors with predictable cash flows for decades. While still undeclared, investors can expect a slight bump to the current $1.50 quarterly dividend with the next ex-date expected in mid-February, based on historical trends.
Despite a solid 5.5% annualized dividend yield, 3M investors have had a tough time, with share prices down over 11% this year and 42% over five years.
Legal Woes Cloud Dividend Stock
Lawsuits have plagued the company on numerous fronts. 3M recently settled a 250,000-plaintiff lawsuit over faulty earplugs in October for $6.1 billion. An even bigger lawsuit into “forever chemicals” remains an issue, as the company, along with DuPont (DD) and other manufacturers, fight lawsuits over harmful chemical exposure.
Legal problems certainly present a risk and help to justify an attractive price-earnings ratio of just 12. Nevertheless, notwithstanding legal problems, 3M is still on a relatively solid financial footing, with debt rated at BBB+ by S&P Global.
3M will report fourth-quarter earnings in late January. Analysts’ consensus EPS estimate is $2.30 on revenue of $7.68 billion. Earnings per share for the year are expected to decline to $9.12 from $9.97 in 2022 but are estimated to recover to $9.88 in 2024.
Investors should also expect further updates regarding 3M’s spinoff of its health care segment, “Solventum,” in the coming weeks.
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