3M hit the news this week with a $12.5 billion settlement over “forever chemicals” from lawsuits brought by cities regarding their drinking water. Not included in the settlement are other claims from states, the federal government, and others regarding personal injury, property damage, and cleanup costs. No one knows where all this is going to go.
3M’s cash reserves and the amount they expect to make from selling off their healthcare business barely covers the announced settlement. 3M is going to face substantial headwinds in the coming years that would justify a dividend rate cut and cause a substantial decline in their stock price.
I’ve made the decision to sell my positions in 3M and use that cash to buy International Paper (IP). International Paper has a similar dividend yield of about 6% and seems to be positioned to weather the current economic turmoil across the world. The reduced their dividend in 2021 after divesting a lower margin business, which accounted for 20% of their sales, but that was the only cut to it’s dividend since they began paying one in 1946.