3M Company’s (NYSE:MMM) stock price continues to drop after trading above $200 per share for much of the Summer. The stock price is now sub-$180 per share. Simultaneously the dividend yield has gone up to over 3.3%. This is a solid yield for this Dividend King and doubles that of the average dividend yield for the S&P 500. In addition, 3M has improved capital allocation, and dividend safety has improved. The main culprit driving down stock price is a revival of thousands of lawsuits regarding 3M’s surgical warming suit. Next, inflation is leading to higher input and labor costs. The company is also faced with a decline in automobile production due to a semiconductor chip shortage. The automobile market is a major one for 3M. Regardless, 3M has faced challenges before. The valuation has come down, though. Although not yet a deal, it is time to take a nibble and buy more 3M. I view the stock as a long-term buy.
Overview of 3M – Time to Take a Nibble
3M traces its history to 1902. The company has grown into one of the largest industrial conglomerates in the U.S. Today, 3M operates in four business segments: Safety and Industrial, Transportation and Electronics, Health Care, and Consumer. The company is known for its Consumer products, but it is also a major supplier to other manufacturers. Major brands include Post-it, Scotch, Scotch-Brite, ACE, Command, Filtrete, Nexcare, and Futuro. By sales in 2020, the largest segment is Safety & Industrial followed by Transportation & Electronics, Health Care, and the smallest segment is Consumer. Total sales were $32,184 million in 2020 and $34,734 million in the LTM.
A discussion of 3M’s risks is necessary due to the number of lawsuits. The main risk that is adversely affecting the stock price is that nearly 6,000 lawsuits for a 3M Bair HuggerTM surgical warming suit were reinstated by the 8th U.S. Court of Appeals…
Please read the complete article at my profile on Seeking Alpha for 3M – Time to Take a Nibble.
Disclosure: Long MMM
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