3M's Cash Flow NightMMMare

3M Company has an impressive dividend-raising history, but cash flow is going the wrong way. [Shield] AN OXFORD CLUB PUBLICATION [Wealthy Retirement]( [View in browser]( SPONSORED [Will They Ban Gold?!]( It's no secret that Washington controls the gold market anytime the economy is on the ropes. Nixon did it... and so did Roosevelt. Will a desperate Joe Biden be next? We could get our answer as soon as June 14. That's when a hush-hush group of bankers will meet in Washington to decide the fate of money. Gold could be in big trouble. [Here's what to do about it.]( Editor's Note: Did you miss this MILLION-dollar trade? You read that right. One of Chief Income Strategist Marc Lichtenfeld's subscribers made over $1 MILLION on a single trade. It was a play Marc recommended on AbbVie that made 907% in 10 months. The beauty of it is his readers didn't have to pay $63 per share to ride this play to profits. Instead, they were able to control shares of this multibillion-dollar company for as little as $1.18 each. That's the power of penny options - pay less, get more. I don't want you to miss discovering how you can use the secret for yourself. [Watch Marc's Penny Options Summit right now.]( - Rebecca Barshop, Senior Managing Editor [SAFETY NET]( [Will a 65-Year Dividend-Raising Streak Soon Come to an End?]( [Marc Lichtenfeld, Chief Income Strategist, The Oxford Club]( [Marc Lichtenfeld]( 3M Company (NYSE: MMM) has one of the most impressive dividend-raising histories in the stock market. In February, the company raised its quarterly dividend by a penny per share to $1.50, giving the stock a 5.6% yield. 3M has paid a dividend for more than 100 years and has raised it annually for an incredible 65 years. There's no doubt that 3M has weathered a lot of storms in its time. But can it withstand its latest troubles and keep its dividend intact? Let's take a look. The company, which makes everything from medical laboratory supplies to Post-it notes, generates billions in free cash flow. But last year, free cash flow declined significantly, repeating 2021's performance of lower cash flow. Falling free cash flow is a red flag for the Safety Net system. This year, free cash flow is forecast to rebound but still be below 2021's level. In fact, if the 2023 projection is accurate, free cash flow will be at the lowest level since 2013 (with the exception of last year). [Chart: 3M's Free Cash Flow Is Going the Wrong Way]( Because free cash flow has been falling and the company lifts its dividend every year, last year's payout ratio was too high. In 2022, 3M paid out 88% of its free cash flow in dividends. My threshold is 75%. I like to have a buffer in case free cash flow falls so that the dividend won't be in jeopardy. This year, if the $4.5 billion in free cash flow is correct, the payout ratio is expected to be 75.6%, just a hair above my limit. Should dividends paid be higher than predicted or free cash flow be lower, the payout ratio will be higher. Of course, the opposite is true too. So if 3M puts in a better performance than expected, the stock could get an upgrade next year based on the payout ratio. SPONSORED [Biden to "retire" US dollar?]( [Biden Signing]( A former advisor to the CIA and Pentagon now believes President Biden plans to retire the US dollar we know. And replace it with what he calls "Biden Bucks". It is underway. On March 9, 2022, Biden signed Executive Order 14067, which could pave the way for "Biden Bucks". [Click to see how to save your investment and retirement accounts.]( 3M Dividend Rating The Safety Net ratings model is quantitative. What is not factored into the grade are two major lawsuits in which 3M is the defendant. In one, the company is being accused of providing faulty hearing protection equipment to the U.S. military. The other lawsuit is about the company's role in producing what are known as "forever chemicals" (human-made chemicals that don't appear in nature and don't degrade). 3M could be on the hook for tens of billions of dollars in damages if the cases go against it. And it doesn't have the cash to pay those kinds of numbers. 3M currently has $3.9 billion in cash with more than $14 billion in long-term debt. So a negative result in these lawsuits could hamper the company's ability to pay its dividend. Again, the legal proceedings aren't factored into the Safety Net rating, but they're an added variable that could negatively affect the dividend. Based on just cash flow and the payout ratio, the dividend looks unsafe. I'm not confident that 3M can make it 66 or 67 years in a row. Dividend Safety Rating: D [Dividend Grade Guide]( If you have a stock whose dividend safety you'd like me to analyze, leave the ticker symbol in the [comments]( section. You can also see whether I've written about your favorite dividend stock recently. Just click on the word "Search" at the top right part of the page, type in the company's name and hit enter. Good investing, Marc [Leave a Comment]( [Explore the Wonders of Israel, Jordan and Egypt]( RECOMMENDED LINKS [Wall Street FEEDING FRENZY on 5G SuperStock!]( [Discover the Top Passive Income Opportunity for 2023... 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