Are you looking for dividend paying stocks with a long history or increasing their dividends, even in recessions? If so, you should take a long, hard look at 3M.
3M For Your Retirement Portfolio
My strategy is to find strong dividend-growth stocks who have shown they will not cut their dividends when times get tough. 3M (MMM) is one of these companies. For 58 years in a row they have increased their dividends. Over the last five years their dividend growth rate has been 14.4%. Their dividend yield is currently 2.5%.
How 3M Can Change Your Retirement Situation
Dividend payers like 3M can vastly improve your retirement situation. Now, don’t get the idea that you should put all of your money into just one stock. We are looking for companies like 3M that have shown they will not cut their dividends. Other companies that fit this bill are Altria (MO), Exxon (XOM), and Procter & Gamble (PG).
Let’s take a look using the WealthTrace Retirement Planner how companies like 3M can improve retirement plans.
I looked at a 51 year old couple that has saved $450,000 for retirement. They only save money into their IRAs and they have a 60/40 split between stocks and bonds. My assumptions were that their stocks would return 7.5% per year and their bonds would return 2.5% per year. I also assumed inflation of 2.3% per year. This couple wants to retire at age 63.
If we take inflation into consideration, how much money will they have at retirement? The results are below:
Beginning Value
Of Account
Ending Value
Of Account (Nominal $)
Ending Value
Of Account (Real $)
Real Annual Return After Taxes
$450,000
$899,740
$624,110
1.50%
In 12 years they see their portfolio only grow by $174,000 in real terms. Using Monte Carlo simulations, we see they only have about a 20% chance of never running out of money.
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