Just one week ago, we received a check from 3M in the amount of $56.33 ($1.11 X 50.747). In looking back at MMM’s dividend increase history, it looks like our next raise is due in Q1-2017. Right now we’re getting a yield of about 2.5%. Since we use an objective selection strategy and dollar cost averaging, we don’t say things like “well, MMM doesn’t hit my target yield of 3% so I’m not buying it”. We try to be purely objective in both selection and buying.
Here’s a look at the past growth rate for MMM’s dividend which appears to have accelerated over the past 5 years:
The last increase was actually 8.3% which was shows a reversion back towards the 10-year average. Let’s just take the 10-year average and see how long we have to wait until this position begins paying us our desired yield of 3%:
- Q1-2017 (2.5 X 1.077) = 2.69%
- Q1-2018 (2.69 X 1.077) = 2.89%
- Q1-2019 (2.89 X 1.077) = 3.12%
Why worry so much about yield when we only need to wait less than 3 years to get to our target yield of 3%. This company has managed to increase dividends now for an incredible 58 years in a row which is a rare breed in our total universe of DGI stocks. Odds are, they are going to protect that track record with all they have because it makes for a very compelling one-liner on investor presentations.
As for our current position in MMM, we’re sitting on about $9,000 worth of shares so we need to buy about $70 worth of shares every month in order to hit our target position size of $13,333. Note that this stock has appreciated over +25% in the past year alone though we don’t really care about share price since our holding period is indefinite. All we care about is that we keep getting those dividend payment raises every year because we know what the share price will inevitably follow.