Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
3M in Focus
Headquartered in St Paul, 3M (MMM - Free Report) is a Conglomerates stock that has seen a price change of -26.59% so far this year. The maker of Post-it notes, industrial coatings and ceramics is paying out a dividend of $1.49 per share at the moment, with a dividend yield of 4.57% compared to the Diversified Operations industry's yield of 0.21% and the S&P 500's yield of 1.75%.
In terms of dividend growth, the company's current annualized dividend of $5.96 is up 0.7% from last year. Over the last 5 years, 3M has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.72%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. 3M's current payout ratio is 60%, meaning it paid out 60% of its trailing 12-month EPS as dividend.
MMM is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $10.84 per share, which represents a year-over-year growth rate of 7.11%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, MMM presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
Free Report Reveals How You Could Profit from the Growing Electric Vehicle Industry
Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in? If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
3M in Focus
Headquartered in St Paul, 3M (MMM - Free Report) is a Conglomerates stock that has seen a price change of -26.59% so far this year. The maker of Post-it notes, industrial coatings and ceramics is paying out a dividend of $1.49 per share at the moment, with a dividend yield of 4.57% compared to the Diversified Operations industry's yield of 0.21% and the S&P 500's yield of 1.75%.
In terms of dividend growth, the company's current annualized dividend of $5.96 is up 0.7% from last year. Over the last 5 years, 3M has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.72%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. 3M's current payout ratio is 60%, meaning it paid out 60% of its trailing 12-month EPS as dividend.
MMM is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $10.84 per share, which represents a year-over-year growth rate of 7.11%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, MMM presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
Free Report Reveals How You Could Profit from the Growing Electric Vehicle Industry
Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in? If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.
>>Send me my free report on the top 5 EV stocks<<
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