3M Co: Is MMM Stock One to Own Forever?
December 16, 2016
Income Investors Should Take Notice of MMM Stock
In order for an investment opportunity to be worth owning forever, it has to be a mature company—one that is likely to be around for the next 20, 50, or even 100 years. One such company that may be worth your consideration is 3M Co (NYSE:MMM) stock. Here’s why.
The reason I mention MMM stock is that the company is a mature business with steady cash flow. Its over-19,000 products include necessities such as toothpaste, bandages, and clothing, and are sold in approximately 200 countries.
3M’s products are items that will always be needed, regardless of the economy and personal finances. Further, the company’s global presence means that if one country experiences a slowdown in sales, then the opportunities for growth in other countries should offset it.
About the Dividend
The reason why I said that this is one stock that investors should consider owning forever is that the dividend, paid out quarterly and reviewed every February, has seen an increase for the past 57 years. Over the past five years alone, the shares have seen growth of 125%, with MMM stock up 18% over the last year. MMM stock is currently yielding 2.51%, with the shares trading at $176.71.
3M Co. has also been engaged in share buybacks. Earlier this year, the board of directors approved a $10.0-billion share repurchase program. This is great news for investors because it means owning a larger stake of the company ownership over the long term, since fewer shares are available for purchase. That’s because fewer shares mean that each share becomes worth a greater percentage of the entire company. (Source: “3M Increases Dividend 8 Percent; Authorizes $10 Billion Share Repurchase Program,” 3M Co., February 2, 2016.)
However, keep in mind the one hidden cost associated with a dividend that is often forgotten: inflation. A rising payout means that the received dividend has a greater chance of staying in line with inflation.
Final Thoughts on MMM Stock
3M Co.’s focus on growing the business has resulted in an increase in revenue, which has been shared with shareholders. And management is shareholder-friendly and continues to reward them.
Owning a company’s stock forever is difficult because an investor needs to be patient, not to mention find the right company. In this case, MMM stock would satisfy the criteria of owning it forever.
