This Diverse 'World Dominator' Is Thriving Today

This week, we're highlighting another World Dominating Dividend Grower ("WDDG")...

Our colleague and Extreme Value editor Dan Ferris coined the term to describe some of the best investments available for long-term investors. They're stocks that you want to hold forever.

WDDGs are often the No. 1 or No. 2 companies in their industries and have great brand names. They're insanely good at beating out the competition. So they remain industry leaders year after year.

And this allows them to continue rewarding shareholders year after year. WDDGs pay out dividends that grow in value. When you buy WDDG stocks and hold them for a long time, you're tapping into an income stream that rarely goes down.

Industrial-products giant 3M (NYSE: MMM) is a perfect example...

It boasts a market cap of $95 billion and has done more than $31 billion in sales in the past 12 months.

More than a century after its creation, the company produces more than 50,000 products across 23 business divisions, which touch the industrial, consumer, health care, technology, and transportation sectors. 3M has nearly 100,000 employees, and it conducts research and development (R&D) in 55 countries. Since its inception, the company has been awarded 122,416 patents.

In virtually every industry in the world, there's at least one product from 3M. It has four different business segments:

• Safety & Industrial
• Transportation & Electronics
• Health Care
• Consumer

3M's business is diverse, which has huge benefits, just as it does for an individual investment portfolio. While 3M's sales do better in a strong economy than during a recession, the company's broad reach means that one product having a bad quarter isn't a catastrophe.

And right now, most of 3M's businesses are doing just fine...

When the coronavirus pandemic hit, the company committed to reporting sales numbers more frequently to help investors get a clearer picture of its business. In July, sales rose to $2.8 billion, up 6% from last year. Organic sales, which exclude sales from acquisitions, rose 3% in the month.

This is a stark contrast to April, when total sales fell 11% over last year and three of the four business segments reported declines. May was even worse, with total sales falling 20% from the same month in 2019. Things began to turn around in June, with sales "only" down about 5% year over year.

By July, the turnaround was in full swing. Three of 3M's four segments reported increased sales over the same month last year. The strong growth in July was led by the Health Care division, which saw sales jump 29% year over year.

3M's Health Care business sells medical devices and equipment. This business got a boost from the high demand for personal protective equipment ("PPE") in light of the coronavirus pandemic. 3M is the largest producer of N95 masks, which are the gold standard for filtering masks in health care.

Health care wasn't the only standout part of 3M's business in July. The consumer segment, which sells things like Post-It sticky notes and Scotch-Brite sponges, saw sales rise 9% in July. And sales in its Safety & Industrial business, which sells things like industrial adhesives and car parts, rose 6%.

So 3M is seeing strength and recovery across all its business lines. And this will be a positive for the company's shares as long as sales continue to trend in the right direction.

Now let's move on to how 3M rewards shareholders...

The dividend payout is important to 3M. It has paid a dividend for more than 100 consecutive years and has raised its payout in each of the last 62 years. 3M currently has a dividend yield (annual dividend payout divided by share price) of 3.6%. That's double the yield of the S&P 500 Index.

Throughout the pandemic, 3M has taken steps to protect its dividend. CEO Michael Roman said the dividend was a "high priority" for the company's capital allocation. To conserve cash, the company paused its share-repurchase program. While this may seem like a bad thing, it shows that 3M is running its business carefully. It's keeping this cash on hand to protect itself if things take another turn for the worse. Once the economy is in the clear, 3M will likely restart its stock buybacks.

As a WDDG, 3M has one of the best businesses in the world. And its diverse business segments are recovering well alongside the broader economy. This should fuel further upside in the stock in the coming months.

Sometimes investing is simple.