3M's Dividend Has Investors Sticking With the Company

NEW YORK (TheStreet) -- If you're going to invest in a good dividend stock, you want it to have surging cash flows. So consider 3M (MMM).

3M -- the maker of the familiar Scotch tape and Post-It notes -- has operations in more than 65 countries. 3M is among the top 30 companies on the Dow Jones Industrial Average. The firm has paid dividends consistently for close to a century now. At around $141, shares are up a fraction for the year to date but up 19% for the past 52 weeks.

In addition, the company has steadily increased its dividend payout for 56 years in a row, an impressive achievement that places 3M among "aristocrats" such as Coca-Cola (KO). 3M's dividend payout continues to rise with dividend yield in close proximity of the industry average. The yield has picked up in 2014 after experiencing a drop in the last fiscal year and has risen from 1.81% to 2.1%.

Analysts are anticipating the dividends to rise to 8.5% in the current fiscal year. Quarterly dividend of 85.5 cents per share has already been announced by the management this past May, an annual increase of 5% for full-year dividends.

Operational cash flow has been rising steadily primarily due to effective management of net working capital and a spike in net income. The company currently boasts a cash flow of about $6 billion.

3M dedicates approximately 30%-32% of its cash flow to dividend payments. In the 2013 fiscal, the company's dividend payouts stood at $1.76 billion, which is a 6% year over year increase. The conglomerate's sales netted the company $8.1 billion in the second quarter of the current fiscal, which is a profit of $1.27 billion, or $1.91 per share, up from $1.20 billion or $1.71 a share year over year. The company converted 103% of the $1.3 billion in net income to free cash flow during the quarter.

3M currently enjoys a low debt-to-equity ratio of 0.35, which represents a low risk profile when compared to the industry standard of 0.9. This also indicates that 3M is strategically prepared to manage interest changes for both long-term and current liabilities. The firm's current debt-to-equity ratio is 37.2% lower than the diversified machinery sector and approximately 51% lower than the industrial goods sector.

3M's Electronics and Energy revenue have jumped by 6.4%, which it makes it the most rapidly expanding sector within the corporation. The Health Care and Consumer segments have grown by 5.1% and 4.2%, respectively. Operating income grew collectively across the board by 5.8%.

If you liked this article you might like

Crazy Weak U.S. Dollar Will Make These 10 Companies Huge Winners

S&P, Dow Close at Record Highs, Brushing Off Geopolitical Concerns

Stocks Shake Off North Korea and London to Stay in Record Territory

Ridiculously Weak U.S. Dollar Will Make These 10 Companies Huge Winners

A Stampede of Buying: Cramer's 'Mad Money' Recap (Monday 9/11/17)