From Scotch tape and Post-it Notes to high-performance industrial materials for use in healthcare and manufacturing, 3M (NYSE:MMM) is a huge conglomerate with an illustrious history of innovation. For shareholders, 3M has also been a strong performer, with impressive long-term share price gains and reliable dividend payments to its investors.

3M ranks among the stocks with the longest streak of making annual dividend increases year in and year out. Yet with its stock having had a tough year in 2019, some fear that 3M's streak might come to an end. Here, we'll take a closer look to see if 3M will come through with a higher dividend in 2020.

Dividend stats on 3M

Metric

Value

Current quarterly dividend per share

$1.44

Current yield

3.5%

Number of consecutive years with dividend increases

61 years

Payout ratio

68%

Last increase

February 2019

Data source: Yahoo! Finance. Last increase refers to ex-dividend date.

How 3M became a dividend legend

You won't find many stocks that have done a better job of delivering long-term dividend growth through good times and bad than 3M has. In 2019, the conglomerate made its 61st straight dividend increase. Among the blue chip stocks in the Dow Jones Industrials, only Procter & Gamble has put together a longer streak.

Young people putting Post-It Notes on a rainbow-colored board.

Image source: 3M.

By the time dividend growth streaks get as long as 3M's is, many companies start to just go through the motions, making only token increases every year. But 3M has resisted that impulse. 2019's boost to $1.44 per share each quarter represented a 6% rise from year-earlier levels. In early 2018, 3M delivered an even more impressive 16% dividend hike. Yet over the past couple of years, the stock has seen its price decline significantly. That's led to a big increase in 3M's dividend yield, which is around 3.5% currently.

MMM Dividend Chart

MMM Dividend data by YCharts.

Yet many investors have grown increasingly worried about 3M's business prospects. Some of the problems that 3M faces are a consequence of its being a cyclical stock with its fortunes tied to the health of the global economy. As many parts of the world have seen an economic slowdown, the multinational has had to endure setbacks in some of its core business segments.

Unfortunately, there's more happening with 3M than just cyclical fluctuations. Litigation exposure has entered the spotlight on multiple fronts, introducing some uncertainty. The potential costs from legal issues like water contamination and defective products could reach the billions, and that led one Wall Street stock analysts to identify the litigation as a possible risk to future dividend growth for 3M.

Will 2020 make 62 years in a row for 3M dividend increases?

3M has always tried to let investors share in its earnings growth, and that's served both the company and its shareholders well over the conglomerate's history. But 2019's been a tough year on the earnings front, as projections for full-year earnings have steadily worsened over the past 12 months. Now, investors expect the company to see year-over-year bottom-line declines of 13% to 14%, and 3M is likely to recoup only about half of that amount in 2020's earnings.

With a payout ratio below 70%, 3M does still have room to give investors a higher dividend even during its current difficulties. However, shareholders shouldn't expect a very large boost in their quarterly payouts in the coming year. In the past, 3M has slowed its dividend growth during some challenging times, and we might be entering another such phase for the Post-It Note maker now.

Based on current conditions and 3M's dedication to dividends, shareholders can anticipate a modest payout increase early in 2020. A boost to $1.50 per share would be just a 4% increase, but it would bring the payout to a round number and help avoid any concerns about overextending its return of capital to shareholders. If 3M can't see its business rebound in 2020, however, then 2021's dividend increase looks a lot more uncertain.