In Our 2024 Investment Strategy for Equities, we introduced our DIVOS™ strategy and during this week’s market turmoil, we initiated a very small position in MMM (3M) and intend to hold and accumulate this stock for the foreseeable future.
Here’s how we think it fits our DIVOS model.
Demographics
MMM 3M Company provides diversified technology services in the United States and internationally. The company operates through four segments: Safety and Industrial; Transportation and Electronics; Health Care; and Consumer. In essence, 3M has its tentacles into every aspect of human existence so we think it’s a great addition to our long term portfolio.
Income
MO is a dividend king which means it has been paying dividends for 50 years and our goal is for at least another 10 years of dividends from this equity. While 3M has generated a negative net income of 16k for 2023 it has traditionally produced $53k net income per employee. The company has been in the news a great deal over lawsuits and growth challenges but there really is no other company like 3M so we added a small position to our portfolio that we plan on growing.
Value
As of the time of this post, MMM is trading at 10 year lows. We will slowly accumulate shares from here but we are keeping an eye on the market volatility and for bond rates to stabilize before we make any significant purchases in this stock.
Options
MMM has an options market and we look forward to selling cash secured PUTS and sell covered calls on this stock to squeeze more value and profits out of this equity. As of 4th of Oct 2023 the call option table below shows a potential yield of about 8% for a buy-write trade executed for January 2024 out-of-money trade today theoretically.
S&P 500
MMM is a member of the S&P 500 and currently fits our bias toward three industries moving forward: Healthcare, Technology & Consumer Discretionary. If you want to know why we favor these three industries, check out the S&P 500 Sector Performance chart.
We’ll let you know as we accumulate more, we’ve already set our MMM to DRIP (Dividend Re-investment Plan) so we’ll be acquiring shares automatically once we receive dividends but we’ll also buy more via cash secured puts and buy-write trades so stay tuned, stay profitable and stay solvent…