A few weeks ago, I gave an overview of the Dow Jones Industrial Average's (^DJI -0.11%) dividend aristocrats -- the nine Dow stocks that have not only paid a dividend for at least the past 25 years but have also increased the amount of their dividend in each of those years. Today we'll take an in-depth look at one of those aristocrats: 3M (MMM -1.05%), which has been paying and increasing its dividend every year since 1959.
Founded in 1902, 3M makes products we use on a regular, if not daily, basis. We all know about its office supplies, but sometimes we may be using a 3M product and not even know it. That's because, in addition to the mainstream consumer-goods market, 3M has moved into specialty markets such as health care and safety -- and that's not to mention its display and graphics segment. Having such a diverse business has allowed 3M to not only thrive during good economic times, but also to survive -- and sometimes even grow -- during the rough times.
Since 1985, 3M has increased its dividend more than 460%. The company made a larger-than-normal dividend increase in 2005 and 2006, when the economy was booming and the company was performing well. But it also increased its payout when the economy went into a slump in 2007, 2008, and 2009.
MMM Dividend data by YCharts.
OK, so maybe you're impressed with the dividend, but how has the stock price itself held up? Well, let's see how it's performed against the S&P 500 (^GSPC 0.02%) over the past few years.
|
1 Year |
3 Years |
5 Years |
10 Years |
15 Years |
20 Years | |
|---|---|---|---|---|---|---|
|
3M (% Change) |
35.9% |
48.1% |
144.7% |
108.3% |
307.1% |
693.5% |
|
3M (Unadjusted % Change) |
32.7% |
37.2% |
113.5% |
62.7% |
184% |
361.9% |
|
SPY (% Change) |
24.2% |
57.4% |
96.5% |
103% |
112.3% |
437.7% |
|
SPY (Unadjusted % Change) |
21.6% |
47.9% |
76.4% |
66% |
62.9% |
273.7% |
Data from Yahoo! Finance and author's calculations.
Other than in the three-year timeframe, 3M has easily beaten the market -- even when you look out 15 or even 20 years. Not only that, but the difference between the adjusted and unadjusted return -- return calculated with and without reinvesting dividends, respectively -- are astonishing, not only in the long run, where returns with dividends reinvested are almost double the actual return, but also in the short term.
While 3M doesn't have the largest dividend yield -- at 2.1%, it's the seventh lowest yield on the Dow -- the company has been increasing its dividend for the second longest time period within the Dow. Furthermore, Procter & Gamble (PG 0.68%), the Dow component with the longest streak, has been paying it for just two years longer than 3M.
In all, 3M's brand power and product strength have given the company the ability to continue paying and increasing its dividend amount year after year -- and it should do so for the foreseeable future.
