Is 3M Still a Good Choice for Dividend-Seekers?

Joshua Aguilar: Wide-moat-rated 3M is one of five diversified industrial firms that has consistently paid an annually increasing dividend for over 60 years. The stock currently trades at a slight 10% discount to our fair value and pays a solid forward dividend yield of 3.1%. We'd be buyers of the stock at our 5-star price of just below $150 per share.

We believe the market has overreacted to two key variables: 1) 3M's latest guidance cut; and 2) 3M's potential PFAS litigation exposure. Since Mike Roman has been at the helm for nearly a year, 3M has been forced to cut guidance on five different occasions. That said, 3M consists of short-cycle businesses that are notoriously hard to predict. Most of the slowdown has come from three distinct end markets which make up over 30% of its revenue base, which include automotive, electronics, and China. And the company simply missed reacting to slowing demand.