There are lots of dividend stocks out there for investors to choose from, but not many have the reputation that 3M Company (NYSE:MMM) has.
Having increased payouts for 61 years in succession and a century of uninterrupted payments to shareholders, it definitely stands out from the pack. The dividend currently yields around 3.5% and could be one of the better stocks that investors can put into their portfolios.
With a track record as impressive as 3M’s, it’s hard to envision the dividend being anything but a safe one. A payout ratio of less than 70% also suggests that the dividend is still affordable for the company and it doesn’t look to be in any imminent danger of its streak being broken.
Although investors haven’t been enamored with the stock after it cut its forecast earlier this year, 3M has still consistently posted profits, and in three of the past four quarters they’ve been above the $1-billion mark.
Having a variety of businesses and products sold all over the world, 3M’s greatest strength may be its diversification. While capital appreciation may be hard to come by for the stock as it has risen just 14% in five years, the stock is still a great buy for the dividend, especially with fears of a recession looming and investors looking for some stability.
The one negative is that at a multiple of 20 times earnings and nine times book value, 3M may be a bit pricey given that growth may be limited. But with the markets valuing stability these days, 3M may be worth the modest premium.
