3M company information
Industrial conglomerate 3M (NYSE:MMM) has a dividend yield of around 3.7%. Investors looking for a big income payer probably won't be too impressed with industrial giant 3M's dividend yield. However, that's higher than the S&P 500 Index's 1.9%, the industrial sector's 1.8% (using Vanguard Industrials Index ETF as a proxy), and, most important, it's toward the high end of 3M's historical yield range. In other words, on a relative basis, 3M's yield is pretty attractive today, which suggests that its valuation is relatively cheap.
The pandemic has hit 3M hard. Its exposure to the automotive, aerospace, and oil and gas markets has hurt the company badly in 2020, and there are still questions around its margin performance.
CEO Mike Roman is actively restructuring the business (two major healthcare acquisitions, totaling $7.7 billion, were made in 2019), and a drug delivery business was sold for $650 million in 2020. Meanwhile, management continues to restructure the company.
3M looks like a good value on a price-to-FCF basis. Furthermore, good FCF ensures Roman has the financial firepower to engineer an improvement, and when the automotive and general industrial economies improve, 3M will see volume improvement. Meanwhile, investors will earn a very useful dividend.