Want $2,000 in Passive Income? Invest $10,000 in This Dow Dividend King and Wait 5 Years

The stock market is full of surprises and can be wildly unpredictable over the short term as fundamentals clash with a mix of fear and greed.

And although the long-term track record of the S&P 500 is excellent (around a 10% compound annual growth rate since 1965), the stock market rarely has an annual return between 8% and 12%. In fact, the S&P 500 has produced an annual return of between 8% and 12% in just four out of the last 50 years — in 1971, 2004, 2014, and 2016.

One of the most tried-and-true methods for combating volatility is to invest in quality dividend stocks that give you regular payouts no matter what the stock market is doing. 3M ( MMM -1.71% ) has been paying and raising its dividend for 64 years in a row, making it one of the oldest members on the short list of Dividend Kings — S&P 500 stocks that have paid and raised their dividends annually for at least 50 consecutive years. The track record is impressive, but an investment is only as good as where it is headed, not what it has done in the past.

Investing $10,000 in 3M stock should give you at least $400 per year in dividend income, or $2,000 over the course of five years. However, this calculation assumes that 3M keeps its dividend the same for five years — when in reality — the amount of dividend income per year will likely be higher given 3M’s track record for raising the dividend. Here’s why 3M is a dividend stock that is worth considering now.

Image source: Getty Images.

An out-of-favor business

The chart for 3M stock is about as ugly as it gets. The company has grossly underperformed the S&P 500 over the past year, three years, five years, seven years, and 10 years — even when factoring in dividends. The last five years in particular have been an eyesore. Investing $1,000 in 3M five years ago would have left you with just $938 today versus $2,080 in the S&P 500.

MMM Total Return Level Chart

MMM total return level. Data by YCharts.

In many ways, the stock deserved to underperform the market. The company launched a…

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