"Starting in May, the manufacturing giant plans to pay a dividend at roughly 40% of its adjusted free cash flow, 3M said in a statement Tuesday as it reported better-than-expected first-quarter earnings. That compares to a payout that translated to more than 60% of its free cash flow last year."
"Departing 3M Chief Executive Officer Mike Roman said in an interview that the decision was a "resetting of our dividend" following the April 1 spinoff of its massive health-care business, now known as Solventum Corp. That business had accounted for about 30% of the company's free cash flow, he said."
"The move breaks with 3M's legacy as so-called dividend aristocrat. The maker of Post-it notes, industrial adhesives and roofing granules earned that reputation by paying a dividend for more than a century without interruption. And through last year, it increased the payout on a per-share basis annually for several decades."
3M will reduce its dividend to about 40% of adjusted free cash flow beginning in May, down from a payout that equated to over 60% of free cash flow last year. The cut follows the April 1 spinoff of the health-care business, Solventum Corp., which provided roughly 30% of the company’s free cash flow. The CEO called the change a resetting of the dividend and said maintaining a competitive dividend remains a priority. Strong first-quarter results, including $2.39 adjusted earnings per share and a 21.9% adjusted operating margin, lifted the stock about 3.6%.
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