In addition, 3M has shown a great propensity to reward shareholders. The company has not only paid but also increased its dividend for 55 consecutive years -- that's over half a century, mind you. In the last decade, these increases have come in at a rate of about 6.6% per year and the company still pays out less than half of its earnings. Furthermore, 3M has done an excellent job of reducing common shares outstanding through its share repurchase program -- going from over 800 million shares outstanding at the end of 1998 to just 683 million in the most recent quarter end.

Taken collectively -- strong operating results, consistent margins and a propensity to reward shareholders -- one would expect that an investor's performance results would mirror closely with the business results of the company. This is exactly what happened: 3M shareholders have enjoyed a compound annual return of 10%, which is slightly above the 8.8% growth rate in earnings per share. This positive difference can be explained by a consistent and increasing dividend with a relatively similar beginning and ending price-to-earnings ratio.

A hypothetical $10,000 investment in 3M on 12/31/1998 would have grown to a total value of $40,736.05, without reinvesting dividends. Said differently, 3M shareholders have enjoyed total returns that were roughly 2.5 times the value that would have been achieved by investing in the S&P 500 over the same time period. Further, one would also have received about 3.2 times as much dividend income as the index.

So in viewing the "business behind the stock," we can easily tell that 3M has been a solid company over the time period given. In addition, a shareholder would have seen return results that roughly tracked the company's business results over the long-term. However, it is paramount to consider how 3M looks today and what it might look like in the future.

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