24/7 Wall St. Insights
- 3M cut the dividend shareholders receive by over 50% in May.
- The stock has rallied on the cut, as it helps the company’s balance sheet.
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Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.
Why Invest in 3M?
Those looking to buy fallen angel Dividend Aristocrat stocks may want to consider shares of industrial/materials giant 3M Co. (NYSE: MMM) as a great contrarian idea and solid passive income-generating machine. The shares have rallied over the last month and still pay a solid 2.76% dividend.
3M operates through four segments:
- Safety and Industrial
- Transportation and Electronics
- Health Care
- Consumer
The Safety and Industrial segment offers:
- Industrial abrasives and finishing for metalworking applications
- Auto body repair solutions
- Closure systems for personal hygiene products
- Masking and packaging materials
- Electrical products and materials for construction and maintenance
- Power distribution and electrical original equipment manufacturers
- Structural adhesives and tapes
- Respiratory, hearing, eye, and fall protection solutions
- Natural and color-coated mineral granules for shingles
The 3M Transportation and Electronics segment provides:
- Ceramic solutions
- Attachment tapes
- Films, sound, and temperature management for vehicles
- Premium large-format graphic films for advertising and fleet signage
- Light management films and electronics assembly solutions
- Packaging and interconnection solutions
- Reflective signage for highway and vehicle safety
The company’s Healthcare segment offers:
- Food safety indicator solutions
- Healthcare procedure coding and reimbursement software
- Skin, wound care, and infection prevention products and solutions
- Dentistry and orthodontic solutions
- Filtration and purification systems
The Consumer segment provides:
- Consumer bandages
- Braces, supports, and consumer respirators
- Cleaning products for the home
- Retail abrasives
- Paint accessories
- Car care DIY products
- Picture hanging
- Consumer air quality solutions
- Stationery products
How many shares of 3M are needed to generate $1,000?
Investors looking to generate $1,000 per year in passive income by owning 3M shares, which pay $2.80 per share each year, would have to buy 357 shares of the stock at current trading prices. That would be approximately a $36,050 purchase, and with the stock acting much better since the dividend was reduced back in May, there could still be some big upside in the shares.
The stock traded as high as $170 just three years ago, in May 2021, and with Wall Street praising the fiscal moves the company is enacting, more analyst support could be on the way. Six Wall Street firms currently rate the stock a Buy.
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