Dow Dividend Aristocrat: 3M

A few weeks ago, I gave an overview of the Dow Jones Industrial Average's dividend aristocrats -- the nine Dow stocks that have not only paid a dividend for at least the past 25 years but have also increased the amount of their dividend in each of those years. Today we'll take an in-depth look at one of those aristocrats: 3M , which has been paying and increasing its dividend every year since 1959.

Founded in 1902, 3M makes products we use on a regular, if not daily, basis. We all know about its office supplies, but sometimes we may be using a 3M product and not even know it. That's because, in addition to the mainstream consumer-goods market, 3M has moved into specialty markets such as health care and safety -- and that's not to mention its display and graphics segment. Having such a diverse business has allowed 3M to not only thrive during good economic times, but also to survive -- and sometimes even grow -- during the rough times.

Since 1985, 3M has increased its dividend more than 460%. The company made a larger-than-normal dividend increase in 2005 and 2006, when the economy was booming and the company was performing well. But it also increased its payout when the economy went into a slump in 2007, 2008, and 2009.

MMM Dividend Chart
MMM Dividend Chart

MMM Dividend data by YCharts.

OK, so maybe you're impressed with the dividend, but how has the stock price itself held up? Well, let's see how it's performed against the S&P 500 over the past few years.

1 Year

3 Years

5 Years

10 Years

15 Years

20 Years

3M (% Change)







3M (Unadjusted % Change)







SPY (% Change)







SPY (Unadjusted % Change)







Data from Yahoo! Finance and author's calculations.

Other than in the three-year timeframe, 3M has easily beaten the market -- even when you look out 15 or even 20 years. Not only that, but the difference between the adjusted and unadjusted return -- return calculated with and without reinvesting dividends, respectively -- are astonishing, not only in the long run, where returns with dividends reinvested are almost double the actual return, but also in the short term.

While 3M doesn't have the largest dividend yield -- at 2.1%, it's the seventh lowest yield on the Dow -- the company has been increasing its dividend for the second longest time period within the Dow. Furthermore, Procter & Gamble , the Dow component with the longest streak, has been paying it for just two years longer than 3M.

In all, 3M's brand power and product strength have given the company the ability to continue paying and increasing its dividend amount year after year -- and it should do so for the foreseeable future.

More on the dividend kings
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notability of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

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Fool contributor Matt Thalman has no position in any stocks mentioned. Check back Monday through Friday as Matt explains what caused the Dow's winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter: @mthalman5513. The Motley Fool recommends 3M and Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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