Portfolio Update
The FiveTwenty portfolio received $212.07 in dividends in the past week. BMY, GD, T and VZ paid their quarterly dividends during the week.
| Past Week Dividend | $212.07 |
| Current Quarter Dividend (Q1 2022) | $345.81 |
| LifeTime Dividend | $2,456.62 |
| Estimated Annual Dividend | $4,254.30 |
The capital allocation for the week of 02/06/2022 to 02/12/2022 will be used to add to our position in 3M Co. (NYSE: MMM)
MMM – Position Update
Since our last check-in on MMM in week 38 of 2021, the company reported Q3 2021 earnings on 10/26/2021 and Q4 2021 and full year 2021 earnings on 01/25/2021. Additionally, the share price has fallen 11.4% from $181.49 to $160.73.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 63 years | 63 years | |
| Yield | 3.68% | 3.26% | 2.51% |
| Payout Ratio | 58.50% | 58.21% | 56% |
| P/E | 15.88 | 17.85 | 19.86 |
Q4 2021 and FY 2021 earnings report
Did MMM’s latest earnings report raise any warning flags?
MMM had a solid FY 2021. Full year results ended up on the high end of the guidance provided during the Q3 2021 earnings results, with revenue growth coming in at the top of the 9% to 10% range and EPS exceeding the $9.70 to $9.90 per share range. Overall, revenues grew 9.9%, net income increased 8.7%, and EPS were 8.1% higher than FY 2020.
| Revenue (in millions) | Net Income (in millions) | EPS . | |
| FY 2020 | $32,184 | $5,449 | $9.36 |
| FY 2021 | $35,355 | $5,921 | $10.12 |
| % Change | 9.9% | 8.7% | 8.1% |
Additional noteworthy developments during the quarter:
- MMM had a stronger than expected finish to the year. In early December indicated that it expected Q4 2022 revenue to decline by as much as 2% compared to the previous year. Instead Q4 2022 revenue came in 1.3% higher.
- Respiratory revenue came in $40 million better than expected in the quarter aided by increased demand due to Omicron.
- For the full year the company return $3.4 billion in cash dividends and repurchased $2.2 billion of its own shares.
Management did not provide FY 2022 guidance during the last earnings call. Management deferred providing the guidance until the strategic update due 02/14/2022.
Thesis
Why are we adding to our position in MMM?
While inflation and the disruption to the supply chain have negatively impacted MMM during the past year, we continue to believe in the long-term viability of the company. Furthermore, the decline in its share price has increased the attractiveness of the company’s valuation.
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