2 interesting companies that have been raising and paying dividends for over 50 years. Is this guaranteed quality?
Companies that pay stable and increasing dividends over the long term are among the best quality investments on the stock market. They provide shareholders with a regular income and a sign of sound business. But are they guaranteed quality?
Walmart $WMT+0.6%
Walmart is the largest retail company in the world, founded in 1962 by Sam Walton. It is headquartered in Bentonville, Arkansas. The company operates a chain of grocery stores and retail sales mainly in the US but also in other countries around the world. Walmart stands out for its low prices due to its bulk purchasing and efficient supply chain management. It also offers financial, telecommunications and internet sales services.
Walmart
WMTCapital Structure
Valuation / Dividends
Capital Eff. / Margins
Last year, the company generated sales of over $622 billion, with more than half of those sales coming from the US. Walmart employs nearly 2.3 million workers worldwide, including 1.6 million in the US. Its stock has a market capitalization of over $400 billion.
The company is sensitive to economic conditions, but its huge scale of business makes it resilient to economic cycles. It has paid stable dividends to its shareholders over the long term, and the amount has been increasing for exactly 50 years in a row.
Although Walmart faces challenges from increasing competition from online retailers, it has been able to maintain its leadership position over the long term due to its giant scale of business and resilience.
The company and stock are undoubtedly quality. But is it guaranteed quality?
Of course not. Nothing is guaranteed in investing. And certainly not that Walmart will continue to pay a dividend. Any company can change its dividend policy at any time. While Walmart has a 50-year history of regular dividend payments and increases, and has managed to pay a dividend even during economic downturns, there is still no guaranteed continuation. But it is very well positioned to do so.
Walmart has a strong balance sheet and generates a lot of free cash, is a very profitable company, and its business is resilient to economic cycles, which should help maintain earnings stability. Management has long emphasized paying dividends. All of this suggests that it should be able to continue to pay a dividend.
However, there are risks. Competition from online sales, higher costs, or regulation could reduce future profits. Adverse economic developments may reduce cash flow. The company might also prefer a different way to reinvest its cash.
In conclusion, while it is likely that Walmart will continue to pay a dividend due to its financial strength and healthy balance sheet, it is not completely certain. It all depends on the evolution of its business and management's priorities.
To continue paying dividends, Walmart must continue to make enough money and maintain a healthy financial position. However, its history of dividend payouts and dividend growth suggests that it should be able to meet shareholder needs over the long term.
$3M $MM-0.7%
3M is an American multinational corporation founded in 1902 and headquartered in St. Paul, Minnesota. 3M is described as a science and technology company that manufactures over 60,000 products in a variety of categories. These include materials for health, safety, transportation, and consumer goods.
3M is sensitive to what is happening in the economy as nearly half of its sales are to corporate customers. In the past, the company has been able to hold up well during recessions. It has provided steady dividends to its shareholders for a long time, and the amount has grown for 63 years in a row. This fast-changing world has created changing conditions for 3M along the way. But the innovation at the heart of its business model allows it to adapt quickly and effectively.
3M
MMMCapital Structure
Valuation / Dividends
Capital Eff. / Margins
Globally, the company employs 94,000 people in more than 70 countries and has generated $33 billion in sales. It has a market capitalisation of around $54 billion and is one of the world's largest corporations. Although the company's growth is slowing compared to the past, increased investment in research and innovation is expected to accelerate the pace of revenue growth in the coming years. 3M has both a large market share and an extensive product line that will put it in a better position to grow profits.
Again - is this a guaranteed future? It is not guaranteed that 3M will continue to pay a dividend. While it has a 113-year history of regular dividend payments and increases, there is still no guaranteed continuation. But again, the assumptions are very good.
There are a number of facts to support this - a strong market position, a good financial position, and the ability to weather recessions. This should allow 3M to continue to pay a dividend. However, there are risks. Changes in the market or an economic downturn could reduce profits and cash flow. However, 3M's long history of a stable dividend policy makes it more likely that it will continue to raise and pay a dividend.
And where are they currently?
Management's outlook for the second quarter was weaker than expected, and the full-year outlook is now more focused on the second half of the year. It is possible that the industrial markets could hold up better, but it is not certain.
Analysts estimate that 2% long-term revenue growth and mid-single digit FCF growth can be expected. These estimates give a fair value range of between $122 and $143, and include an estimate of more than $30 billion in legal payouts related to PFAS and earplug litigation. Thus, a somewhat uncertain estimate one way or the other.
Disclaimer: This is in no way an investment recommendation. This is purely my summary and analysis based on data from the internet and other sources. Investing in the financial markets is risky and everyone should invest based on their own decisions. I am just an amateur sharing my opinions.
