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Why 3M Hit an All-Time High

3M Co. (MMM) operates in several end markets and geographies, using its scale to get lower costs than competitors. Moreover, new patents should help to achieve growth with operating margins of more than 20%.

The company was able to increase free cash flow and remain profitable. 3M has great cash generation with the adhesives and tapes segment as the biggest contributor. Free cash flow permits the company to maintain a dividend, which has increased for more than 50 years. The current dividend yield is 2.14%, which is quite good for protecting purchasing power, especially considering the consistency of dividend payments and favorable expectations regarding dividend growth and share repurchases over the next several years.

More than 10 years ago, sales in emerging markets accounted for a fifth of the company's revenue. Now it is close to 50%.

Moreover, the company is focused on research and development and growth in emerging markets. Both should contribute to organic revenue growth. Over the years, 3M has achieved economies of scale, introducing new products of high margins. R&D spending is around 5.5% to 6% of sales.

The company reported...


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