Today, we report on one of the most durable dividend stocks in America. 3M Company has paid a dividend for the past 98 years and raised its payout for 57 consecutive years. The company is well-known for everyday products such as Scotch tape and Post-it notes, and it continues to spend steadily on the research and development of new products. 3M is also pursuing new technologies and new markets by means of acquisition—it has made three in 2015 alone. We look at how 3M’s strong market position and growth strategy help cut the risk that comes with multiple acquisitions.
3M has made a number of acquisitions in the past few years. Expanding this way is riskier than internal growth, as the buyer of something rarely knows as much about it as the seller. Hidden problems can lead to big writedowns, as Microsoft found out with its recent purchase of Nokia’s mobile phone operations (read our article The cloud powers Microsoft past Nokia stumble).
However, 3M’s recent purchases of companies that make medical supplies and safety equipment help offset the cyclical nature of its main businesses. Moreover, 3M is a leader in most of its markets. That means it can charge higher prices, particularly for new products that face little competition.
3M COMPANY (New York symbol MMM; www.3m.com) started up in 1902, when it was called the Minnesota Mining & Manufacturing Company.
3M started off making sandpaper and abrasives for industrial clients. It later developed other consumer and manufacturing-related goods, such as pressure-sensitive masking and packaging tape, recording tape and reflective highway markings.
Today, 3M makes more than 55,000 items, including air purifiers, medical device components and bandages. Top-selling brands include Post-it notes, Scotch tape, Scotch-Brite cleaning products, Scotchguard protection and Thinsulate insulation.
The company has five main business segments: industrial (which supplied 34% of its 2014 sales and 32% of its earnings), safety and graphics (18%, 17%), electronics and energy (17%, 15%) health care (17%, 23%) and consumer (14%, 13%).
The company has a presence in many countries. Sales from outside the U.S. now account for two-thirds of its total, up from around half in 2000.
Rising demand for 3M’s products following the 2008/09 recession pushed up its sales by 19.3%, from $26.7 billion in 2010 to $31.8 billion in 2014. Earnings gained 18.9%, from $4.2 billion in 2010 to $5.0 billion in 2014. 3M has repurchased roughly 11% of its outstanding shares over the past five years. As a result, its per-share earnings rose at a faster rate of 30.3%, from $5.75 to $7.49.
The company fuels its growth by constantly improving its existing products and developing new ones. In 2014, it spent 5.6% of its sales on research; it plans to boost that to 6.0% in 2017.
"Greatest performance consistency"
The most successful Canadian investors have as much as 25% of their portfolios in U.S. stocks. Pat McKeough will help you build the same profit potential and diversification into your portfolio with his proven record of picking the best U.S. stocks.
Pat’s special advisory on U.S. investing has the endorsement of Hulbert Financial Digest, the independent authority on investment newsletter performance. Hulbert ranks Wall Street Stock Forecaster among "newsletters with the greatest performance consistency over the past decade" with an annual average return of 10.6%. Wall Street is the only Canadian newsletter on this list.
Dividend stocks: After 3 acquisitions in 2015, strong balance sheet will let 3M keep expanding
In addition to its strong commitment to research, 3M uses acquisitions to get access to certain technologies or move into new markets.
For example, in 2012 it paid $798 million for Ceradyne, a maker of temperature-resistant ceramics. Manufacturers are increasingly using ceramic materials to make engine parts and other industrial products because they’re stronger and more rust-resistant than traditional metals and plastics. They also work together with less friction.
Two years later, in April 2014, 3M paid $94 million for Treo, which makes software that health plan providers use to collect and analyze patient data. That cuts these users’ costs and helps ensure they’re delivering the proper medical services.
In the first half of 2015, 3M announced three more purchases, the biggest of which is a $2.5-billion deal for Capital Safety, a Minnesota-based maker of harnesses, self-retracting lifelines and other gear for protecting workers from falls. Its clients are in the construction, mining and transportation industries.
Capital Safety looks like a good fit with 3M’s other safety equipment, such as protective eyewear, face masks and earplugs. Demand for these products is growing strongly as governments step up enforcement of safety regulations.
The company also paid $1.0 billion for Polypore International’s (New York symbol PPO) Separations Media division, which makes membranes and filters for a variety of industrial and health-care uses, including dialysis, purifying drugs and filtering water.
Finally, 3M paid $153 million for Ivera, which makes products that disinfect and protect medical devices that access a patient’s bloodstream.
The company’s strong balance sheet will let it keep expanding. As of June 30, 2015, its long-term debt was $8.4 billion, or just 9% of its market cap. It also held cash of $3.5 billion, or $5.58 a share.
Even after its recent acquisitions, goodwill and intangible assets totalled $8.3 billion, which is a low 9% of 3M’s market cap. Moreover, the company targets smaller firms that operate in niche markets and are easy to absorb. That reduces the chance of a large writedown if these businesses run into trouble.
Meantime, 3M aims to spur its earnings with a new computerized management system that will help it track and analyze data on things like raw materials, inventories and customer relationships. The company will spend $1.2 billion on this technology, but it expects it to cut $500 million to $700 million from its annual costs starting in 2020.
The high U.S. dollar is hurting the contribution of 3M’s overseas businesses, but its recent acquisitions should still increase its 2015 earnings by 4.5%, to $7.83 a share. The stock trades at 18.3 times that estimate. Earnings could reach $8.66 a share in 2016, and the stock trades at a more reasonable 16.5 times that figure.
The company has paid dividends without interruption for 98 years. It has also raised its payout annually for the past 57 years. The current annual rate of $4.10 yields 2.9%.
Recommendation in Wall Street Stock Forecaster: BUY
This number is recorded as an additional security precaution.
3-digit, non-embossed number printed on the signature panel on the back of the card immediately following the card account number.
3-digit, non-embossed number printed on the signature panel on the back of the card.
The privacy of the site/store visitor is very important to TSI Network, and is respected at all times. The information we receive from customers helps us to personalize and continually improve your online experience at TSI Network.
We do not collect or disclose personal information, except when it is provided to us voluntarily by the site/store visitor with their consent.
We store subscriber and password files containing personal information securely. These files are stored in secure areas that are not accessible to the general public. We are always working to ensure the security of your personal information.
What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
Information You Give Us: We receive and store any information you enter on our website or give us in any other way through sign-up forms or ordering forms for publications and services. You can choose not to provide certain information, but then you might not be able to take advantage of many of our services and features. We use the information that you provide for such purposes as responding to your requests, customizing your web browsing experience for you, improving our website, and communicating with you.
Automatic Information: We receive and store certain types of information whenever you interact with us. For example, like many websites, we use "cookies," and we obtain certain types of information when your web browser accesses TSI Network.
Information from Other Sources: For reasons such as improving personalization of our service (for example, providing better product recommendations or special offers that we think will interest you), we might receive information about you from other sources and add it to our account information. We also sometimes receive updated delivery and address information from our shippers or other sources so that we can correct our records and deliver your next purchase or communication more easily.
We do reserve the right, however, to collect and perform statistical analyses of the internet traffic to our website for our internal use. However, information collected does not allow us to identify any individual, and will not collect any personal information of the visitor. Furthermore, we do not sell, rent or loan to any outside parties the information collected and analyzed.
Although you may be able to access some of our websites without being required to register or provide personal information, certain websites and sections of our websites may require registration. In addition, if you choose to contact us to ask a question, we will collect your personal information so that we can respond to your question.
To make the visitor’s experience on our website easier, we may use per-session “cookies” (session identifiers) to track the state of the visitor session. This “cookie” is destroyed when your session with our website is over.
Cookies are alphanumeric identifiers that we transfer to your computer's hard drive through your web browser to enable our systems to recognize your browser and to provide features like "Remember Me" for our paying subscribers. Cookies are also used during the ordering process to help ensure your order is handled correctly. We do not extract any information about individual users or their computers as a part of this process.
The "Help" portion of the toolbar on most browsers will tell you how to prevent your browser from accepting new cookies, how to have the browser notify you when you receive a new cookie, or how to disable cookies altogether. However, cookies allow you to take full advantage of some of TSI Network's most useful features, and may be required to access certain areas of our website.
Internet Protocol (or IP) addresses are collected for all visitors to this site. This information is used for the purposes of traffic analysis.
Does TSI Network Use the Information It Receives?
"Contact Us" and Comment Features: TSI Network encourages visitors to its websites to contact us with questions and comments. Email addresses and other information of persons using these features may be collected in order to facilitate our responses to those inquiries.
Purchases of Merchandise: TSI Network websites may offer individuals the opportunity to purchase branded or other merchandise online. In connection with those purchases, customers may be asked to submit personal information, such as shipping addresses and credit card information, which is required to complete the transaction. TSI Network may also offer a Membership program, through which purchasers of its products may receive discounts on their online purchases. Membership registration may involve the submission of personal information to TSI Network and assignment of a user ID and password.
Agents: We employ other companies and individuals to perform functions on our behalf. Examples include fulfilling orders, delivering packages, sending postal mail and email, removing repetitive information from customer lists, analyzing data, providing marketing assistance, processing credit card payments and providing customer service. They have access to personal information needed to perform their functions, but may not use it for other purposes.
Promotional Offers: We may make our postal mailing list available to organizations offering products or services that might interest you. If you prefer NOT to receive these offers, please send an email with your name and address to email@example.com with "Do Not Rent Name" in the subject line. We do NOT make our email list available outside our organization.
Protection of TSI Network and Others: We release account and other personal information when we believe release is appropriate to comply with law; enforce the terms of the Legal notices that accompany this policy; or protect the rights, property or safety of TSI Network, our users or others. This includes exchanging information with other companies and organizations for fraud protection and credit risk reduction.
In addition to these limited disclosures of personal information, TSI Network may provide its affiliates or unaffiliated third parties with aggregate information about visitors to our sites. For example, we might disclose the median ages of visitors to our websites, or the numbers of visitors to our websites that come from different geographic areas. Such aggregate information will not include information of any individual visitors to our websites.
TSI Network may provide personal and other information to a purchaser or successor entity in connection with the sale of TSI Network, a subsidiary or line of business associated with TSI Network, or substantially all of the assets of TSI Network or one of its subsidiaries, affiliates or lines of business.
With Your Consent: Other than as set out above, you will receive notice when information about you might go to third parties, and you will have an opportunity to choose not to share the information.
Except as provided herein, TSI Network will not sell or rent personal information about you to unaffiliated third parties.
We may disclose personal information you have provided through our websites, for the above purposes, to persons or companies that we retain to carry out and other activities for which you have registered or in which you have otherwise asked to participate. In particular, we may for these purposes transfer information to any country (including the USA and other countries which may not offer the same level of data protection as Canada). We also will disclose personal information if required by law, including compliance with warrants, subpoenas or other legal processes.
TSI Network requires persons and companies to which it discloses personal information to restrict their use of such information to the purposes for which it has been provided by TSI Network, to adequately protect the information, and not to disclose that information to others. TSI Network cannot be responsible, however, for any damages caused by the failure of unaffiliated third parties to honour their privacy obligations to TSI Network. Similarly, TSI Network is not responsible for the privacy policies and practices of other websites that are linked to our websites.
We’re always happy to receive feedback, comments and ideas from TSI Network visitors, and we encourage you to add your perspective to any issue by leaving your comments on the site.
To make sure users get the most out of the site’s comments function, we’ve provided a few guidelines:
Do not post threatening, harassing, defamatory, or libelous material.
Do not intentionally make false or misleading statements.
Do not offer to sell or buy any product or service.
Do not post material that infringes copyright.
Do not post information that you know to be confidential or sensitive or otherwise in breach of the law.
TSI Network will not accept responsibility for information posted in the comments.
Please note that we reserve the right to delete or edit all comments. As well, we may close posts to further comments at our discretion. If a user repeatedly abuses our comment policy, we may also revoke that user’s access to our comments section.
By commenting on TSI Network, you agree that you retain all ownership rights in what you post on the site, and that you will relieve us from any and all liability that may result from those postings.
Special Note for Parents
TSI Network does not sell products for purchase by children. If you are under 18, you may use TSI Network's site only with involvement of a parent or guardian
How do we protect your personal information?
TSI Network does everything possible to prevent unauthorized intrusion to its websites and the alteration, acquisition or misuse of personal information by unauthorized persons. Notably passwords submitted by users of our websites are encrypted using encryption mechanisms. However, TSI Network cautions visitors to its websites that no network, including the Internet, is entirely secure. Accordingly, we cannot be responsible for loss, corruption or unauthorized acquisition of personal information provided to our websites, or for any damages resulting from such loss, corruption or unauthorized acquisition.
How do we maintain the integrity of your personal information?
TSI Network has procedures in place to keep your personal information accurate, complete and current for the purposes for which it is collected and used. You may review the information that you have provided to us and where appropriate you may request that it be corrected. If you wish to review your personal information please send a request to: firstname.lastname@example.org.
How do I withdraw my consent to use Personal Information? Access, Correction, Inquiries and Complaints
If you wish to request access to, or correction of, your personal information in our custody or control, or find out how we've used or disclosed that information, please make your request in writing to us. We may need to verify your identity before searching for or providing you with personal information. In some circumstances, we may not be able to provide access to your personal information, for example if it contains the personal information of other persons, if it constitutes confidential commercial information, or if it is protected by solicitor-client privilege. If we deny your request for access to, or refuse a request to correct, your personal information, we will advise you of the reasons for this refusal.
If you do not want to receive promotional offers, please notify TSI Network by sending an email to email@example.com.
The provision of information by you is entirely voluntary and you have the right not to provide information. Subject to applicable law, you may have the right to receive certain information as to whether or not personal information relating to you is held by TSI Network and to obtain a copy of such information that is sought. You may also have the right to require information, where appropriate, to be erased, blocked or made anonymous or to have data updated or corrected. If you do not wish TSI Network to hold information about you or if you wish to have access to information, modify information, or object to any processing of information or if you have questions please contact us.
What Choices Do I Have?
As discussed, you can always choose not to provide information even though it might be needed to make a purchase or to take advantage of TSI Network features.
You can add or update certain information as explained in the section "How Can I Change My Information?"
If you do not want to receive email or other mail from us, please notify TSI Network by sending an email to firstname.lastname@example.org.
Changes to this Policy
This Policy is the sole authorized statement of TSI Network's practices with respect to the collection of personal information through TSI Network's websites and the subsequent use and disclosure of such information. Any summaries of this Policy generated by third party software or otherwise (for example, in connection with the "Platform for Privacy Preferences" or "P3P") shall have no legal effect, are in no way binding upon TSI Network, shall not be relied upon in substitute for this Policy, and neither supersede nor modify this Policy.
TSI Network may revise this Policy from time to time.
Legal Notices and Disclaimers
The contents of this web site and our publications are based upon sources of information believed to be reliable, but no warranty or representation, expressed or implied, is given as to their accuracy or completeness. Any opinion reflects the Successful Investor’s judgment at the date of publication and neither the Successful Investor, nor any of its affiliated companies, nor any of their officers, directors or employees, accepts any responsibility in respect of the information or recommendations contained in the publications or on this web site. Moreover, the information or recommendations are subject to change without notice.
Information presented on this web site or contained in our publications is not an offer, nor a solicitation, to buy or sell any securities referred to on the web site or in the publications. The material is general information intended for recipients who understand the risks associated with an investment in any securities referred to in the publications or on this web site. The Successful Investor has made no determination regarding whether an investment, course of action, or associated risks are suitable for the recipient.
You are trying to access subscribers-only content. If you are already a subscriber, use the form below to log in.
Subscribers will have unlimited access to the magazine that helps people live more sustainable, self-reliant lives, with feature stories on tending the garden, managing the homestead, raising healthy livestock and more!
You are trying to access subscribers-only content. If you are already a subscriber, use the form below to log in.
Subscribers will have unlimited access to the magazine that helps the small-scale poultry enthusiast raise healthy, happy, productive flocks for eggs, meat or fun - from the countryside to the urban homestead!