Recent Stock Purchases – MMM And XOM

After complaining in my last two monthly dividend income summaries about not making a stock purchase that month, my purchase moment finally arrived. Man did it feel good coming off the sidelines. The market is presenting us with some opportunities, so I’m sure there were plenty of other stocks to consider as well. But for now, I was perfectly content adding to two Dividend Aristocrats that I already own. Here is why I purchased 3M Company (MMM) and Exxon Mobil (XOM) recently.

The Strategy

Both of these stocks were purchased on dates when the market fell rapidly, and drastically. On days like these, I try to focus on purchasing a certain type of company.

The next section will discuss each purchase in greater detail and run the company through our stock screener. For each, we will use the stock price on the date of close, average analyst EPS per Yahoo! Finance, and their 5-year dividend average dividend growth rate per dividendinvestor.com.

Purchase #1: 3M Company (MMM)

3M Company (MMM) is one of my favorite companies to own. They are one of my 5 “Always Buy” stocks for a reason. Besides the dividend history, which I’ll touch on a little later, the company has power brands in both the consumer and business sectors. For consumers, heard of Scotch-Brite, Bandaid, Ace, Post-it, Filtrete, and Aqua-Pure? Thought so. While business brands are less known, the company has a strong presence in the automotive, communications, electronics, healthcare, and other sectors. Think about that diversification for a second. That’s why I am always excited to buy this company when the opportunity presents itself.

Let’s look at MMM.  My purchase price was $165.00.I’ll use an annual dividend of $5.76 per share and forward EPS of $9.41 per share.

  • P/E Ratio – 17.53X – Is MMM the worlds greater discount at this moment? Nope. However, when we screen for stocks, we start by comparing the company against the broader market.MMM’s currently, the P/E ratio is below the S&P 500, which is in the low 20X range.
  • Payout Ratio – 61% – MMM’s current payout ratio is JUST above the 60% threshold we use in our stock screener.I’m not losing any sleep over 1%. If the company’s payout ratio were 81%, we may be having a different discussion.
  • History of Increasing Dividends – MMM is a Dividend, Aristocrat. Scratch that, they are a Dividend King.MMM has increased their dividend for 60 years. It can’t get any better than that.MMM also has a strong dividend growth rate. Their 5-year average dividend growth rate is 13.63%. So not only have they increased their dividend for 60 years, but their dividend growth rate has been pretty strong over the last five days as well.
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Disclaimer: I do not recommend any decision to the reader or any user, please consult your own research. Thank you.

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