The Rising Influence of Rising Affluence

[DewDiligence]

3M +3% on hefty dividend increase, solid 2014 and long-term (2017) guidance, and an increased buyback plan:

http://finance.yahoo.com/news/3m-affirms-long-term-sales-133100602.html

The annualized dividend was boosted 35% to $3.42 (from $2.54); at the current share price, the dividend yield at the new payout rate is 2.6%. This is the 56th consecutive year that 3M has raised the dividend!

2014 GAAP EPS guidance is $7.30-7.55 (+9-13% versus an expected $6.71 in 2013); at the midpoint of 2014 EPS range ($7.425), the current share price equates to a forward P/E ratio of 17.7.

3M also provided new guidance for the five-year period comprising 2013-2017 (inclusive):

• 9-11% EPS growth

• 4-6% “organic” revenue growth (i.e. revenue growth excluding acquisitions, divestitures, and foreign exchange)

• Approximately 20% return on invested capital

• Approximately 100% free cash flow conversion (i.e. the ratio of free cash flow to GAAP EPS)

As icing on the cake, 3M also said it will repurchase $17-22B of stock during the next four years (up from the prior guidance of $7.5-15B). At the current share price, $17-22B of buybacks would decrease the number of shares outstanding by 23-29%!

3M held an investor webcast today to discuss the above and related issues.