3M Boosts Dividend Payout, Stock Repurchase Plan
With S&P 500 companies expected to boost dividend payouts by 10.4% to a record total of $310 billion this year, 2013 has been a good year for income investors.
Diversified industrial giant3M ( MMM ) is just one of the big caps focusing on shareholder returns lately. On Dec. 18, the St. Paul, Minn.-based company increased its quarterly dividend for the first quarter of 2014 by 35% to 85.5 cents.
It also lifted its five-year stock repurchase program to $17 billion-$22 billion from $7.5 billion-$15 billion. The company forecast 2014 earnings at $7.30-$7.55, with the midpoint above consensus views for $7.40. Shares rallied 4% that day.
Quarterly cash dividends have been paid for more than 97 years in a row and 3M has increased the payout amount for 55 consecutive years. It offered a quarterly dividend of 63.5 cents a share in 2013, up 8% from the prior year.
Based on the 85.5 cents 3M will pay out, its annualized yield is about 2.5%, slightly above that of the S&P 500.
Earnings dipped 1% in the first quarter this year, but recovered with 3% and 8% growth in Q2 and Q3 respectively. Analysts expect Q4 profit gains of 14%.
The three-year Earnings Stability Factor is a very stable 1 on a scale from 0 to 99 for 3M. Its five-year factor is 7. Its annual profit stumbled in 2009 but recovered and resumed growth in 2010. Consensus estimates call for EPS to rise 5% this year and 11% the next.
The provider of industrial tapes and adhesives, medical supplies, office products and surveillance gear is geographically diversified. The U.S. accounted for 35% of revenue last year, Asia Pacific 30%, Europe/Middle East/Africa 23%, and Latin America and Canada 12%.
The stock tends to be a slow and steady performer over time, but has outperformed the overall market this year. It's surged 47%, well ahead of S&P 500's 28% gain.