Portfolio Update
The FiveTwenty portfolio received $16.38 in dividends in the past week. GD paid their quarterly dividend during the week.
| Past Week Dividend | $16.38 |
| Current Quarter Dividend (Q4 2022) | $470.77 |
| LifeTime Dividend | $6,766.05 |
| Estimated Annual Dividend | $7,035.86 |
The capital allocation for the week of 11/13/2022 to 11/19/2022 will be used to add to our position in 3M Co (NYSE: MMM)
MMM – Position Update
Since our last check-in on MMM in week 23 of 2022, the company reported Q2 2022 earnings on 07/26/2022, and Q3 2022 earnings on 10/25/2022. In addition, the share price decreased 8.9% from $145.97 to $132.98.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 63 years | 63 years | |
| Yield | 4.47% | 4.07% | 2.53% |
| Payout Ratio | 58.74%1 | 59.40%2 | |
| P/E | 13.131 | 14.602 |
1 computed using TTM adjusted EPS of $10.13 as of Q3 2022
2 computed using TTM adjusted EPS of $10.00 as of Q1 2022
Q3 2022 earnings report
Did MMM’s latest earnings report raise any warning flags?
For Q2 2022, MMM’s total sales experienced a negative impacts of 1% from divestitures and 4% from foreign currency exchange. Organic sales on the other hand increased 2% compared to the year ago quarter. Overall, MMM reported revenue decline of 3.6%, adjusted net income growth of 1.2%, and an adjusted EPS increase of 4.3% for Q3 2021.
| Revenue (in millions) | Adj. Net Income (in millions) | Adj. EPS . | |
| Q3 2021 | $8,942 | $1,513 | $2.58 |
| Q3 2022 | $8,619 | $1,531 | $2.69 |
| % Change | (3.6)% | 1.2% | 4.3% |
Additional noteworthy developments during the quarter:
- The company returned $1 billion to shareholders in the form of dividends and share repurchases.
- On 11/08/2022, MMM’s board declared a quarterly dividend of $1.49 per share payable 12/12/2022 to shareholders of record on 11/18/2022.
Looking ahead, MMM expects full year 2022 adjusted EPS to come in between $10.10 to $10.35 per share. The adjusted EPS guidance was lowered from a previous $10.30 to $10.80 per share. Organic sales growth is now expected to be 1.5% to 2.0%. The company also expects a -4.5% impact on sales from currency transactions.
Thesis
Why are we adding to our position in MMM?
MMM has a strong core business powered by the company’s continued investment in R&D. Over the course of this last year, MMM has demonstrated that it is able to navigate the headwinds in the economy and from the PFAS litigation successfully.
Therefore, we continue to add to our position at an attractive starting yield and valuation.
Previous Articles
- 2022 Week 23: 3M Co (NYSE: MMM)
- 2022 Week 6: 3M Co (NYSE: MMM)
- 2021 Week 38: 3M Co (NYSE: MMM)
- 2021 Week 18: 3M Co (NYSE: MMM)
- 2021 Week 9: 3M Co (NYSE: MMM)
Additional Research
Photo by Leslie Reagan Bodin on Unsplash