3M: A “Forever” Growth Stock

09/29/2014 7:00 am EST


Tyler Laundon

Editor, Cabot Small-Cap Confidential

Our latest featured company is a true "forever" growth stock that every single growth investor should own today, suggests Tyler Laundon in Daily Profit.

At any given time, conservative growth investors will have a hard time finding a better stock to buy than 3M Co. (MMM). It is a great technology company and deserves a place in every growth investor's portfolio.

Over the past 20 years, the stock is up six-fold. Over the past five years, since the bottom of the recession? A very nice 182%. And don't forget, there have been dividend payments along the way as well.

I'm sure you have a roll of 3M tape somewhere in your house and a 3M "Post It" notepad next to your phone. The company makes thousands of products, from adhesives and films to medical supplies. This company does it all, and it does it very well all around the world. 

The backbone of 3M's business is its R&D department. R&D typically spends the equivalent of 5% to 6% of the company's total revenues inventing new products and making improvements to existing ones.

3M was issued its 100,000th patent in May. Innovation is at this company's core, which is why it's been awarded so many patents since 1924.  But this business isn't all about innovation...conservative management also means reliable profits and cash flow. 

Over  the last decade—mind you, this includes the 2008-2009 recession—MMM has grown revenues at an average annual rate of 5.4% and net income at 6.8%. For a company that generated over $30 billion in sales last year, this is no small accomplishment. 

The company is a cash cow, able to return money to shareholders in the form of stock buybacks and dividends (current yield is 2.5%).

This isn't a stock that's going to surge 10% overnight. But it's equally unlikely to drop 10% overnight, either. It's a stock that every growth investor can own. Buy some now and buy a little more every few months.

Subscribe to Daily Profit here…

More from MoneyShow.com:

Morningstar Dividend: Four Core Holdings 

Emerson Electric: 57 Years of Dividend Increases 

A New Look for General Electric

  By clicking submit, you agree to our privacy policy & terms of service.

Related Articles on STOCKS

Keyword Image
2 Ways to Bet on BDCs
2 hours ago

Business development companies (BDCs) lend money to private companies in the form of fixed and varia...