Dividend Increase | 3M Company (MMM)

Getting a pay raise while sitting on the couch?  Sign me up!  Thanks 3M for another dividend increase!

There's an old Chinese proverb that says "the best time to plant a tree was 20 years ago, the next best time is now".  The reason for this is that it takes time for a tree to grow and prosper and for you to start reaping its benefits.  Dividend growth investing is much the same way.  It takes consistent saving and investing as well as time and patience to let the power of dividend growth take hold.

That's why one of my favorite things is when one of the companies I own decides to pay out more in dividends.  You mean I get a pay raise just for owning a small piece of a company?  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  


On February 5th the Board of Directors at 3M Company (MMM) approved an increase to their quarterly dividend.  The dividend payout was increased from $1.36 to $1.44.  That's a 5.9% increase from the prior payout.  3M is a Dividend Champion with 60 consecutive years of dividend increases.  Shares currently yield 2.86% based on the new annualized payout.

The new $1.44 dividend payment will be payable on March 12th to shareholders of record as of February 15th.

Since I own 18 shares of 3M in my FI Portfolio this raise increased my forward 12-month dividends by $5.87.  This is the 5th dividend increase I've received from 3M since initiating a position in August 2014.  The total organic dividend growth since I initiated a position has been 68.4%.  According to US Inflation Calculator the cumulative rate of inflation over that same time is 6.1%.  

A full screen version of this chart can be found here.

As an industrial company 3M has seen its operations follow the economy through its ups and downs.  However, every year for 60 years a dividend increase has come which puts 3M as one of the longest active streaks of dividend growth.  Dividend growth over the short term might be quite lumpy, but when you look at it over longer periods of time it's been remarkably consistent.  The average 10 year dividend growth rate has come in at 7.20% with a minimum of 4.40% and a maximum of 10.94%.  Surprisingly enough the 10.94% is for 2019's 10 year dividend growth rate looking back to 2009.

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 1977 can be found in the following chart.  

A full screen version of this chart can be found here.

*2019's dividend assumes the new payout of $1.44 per share is maintained for the rest of 2019.

Wrap Up

This raise increased my forward dividends by $5.76 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 3.04% this raise is like I invested an extra $190 in capital.  Except that I didn't!  One of the companies I own just decided to send more cash my way.  

That's how you can eventually reach the crossover point where your dividends received exceed your expenses.  That's DIVIDEND GROWTH INVESTING AT WORK!  The beauty of the dividend growth investing strategy is that you build up your dividends through fresh capital investment as well dividend increases from the companies you own.

Thus far in 2019 I've received 6 total increases from 7 of the 52 companies held in my FI Portfolio.  In total my forward 12-month dividends have increased by $53.95.

My FI Portfolio's forward-12 month dividends increased to $6,740.59.  Including my FolioFirst portfolio's forward dividends of $92.09 brings my total taxable accounts dividends to $6,832.68.  My Roth IRA's forward 12-month dividends increased to $414.23.

Do you own shares of 3M?  Were you pleased with that dividend increase or a bit disappointed?

Please share your thoughts below.