3M Co (NYSE:MMM) a Backbone Portfolio Stock

October 5, 2016

Patrick Pascal, President of Chelsea Management, says 3M Co (NYSE:MMM) has been a key stock for his firm’s portfolio because of the company’s continued R&D investments and dividend-raising history, among other characteristics.

It’s been in our portfolio for many, many years, presently trading in the high $170s and low $180s. We owned it for many years and have cost basis between $30 and $60 for most of our clients.

But what we like about 3M is its product diversity, its excellent management and long-term philosophy that used to be fairly standard in American industry but has gone by the wayside. 3M continues to spend an inordinate share of its money on R&D. They have a goal that 15% of their revenues comes from products that were developed within the last five years.

They’re in industrial supplies, adhesives and all of that kind of things, but they’re also in consumer staples like Post-it notes and Scotch Tape. They’re also quite strong in health care. Most dental practices couldn’t open these days without 3M. They continue to add many, many high-tech items.

So 3M is a perfect kind of company that we like, particularly in this kind of market. It still yields a better than 2.4% and has a long history of raising its dividend, and we think that can continue for some time.