3M Stock Faces 9% Downside Risk Due to Solventum Spin-off: Analyst Warns
3M Stock Outlook: Analyst Issues Warning on Potential 9% Downside Risk
Analyst Deane Dray predicts a 9% loss for 3M stock following the planned spin-off of its Solventum healthcare business. The move could impact the sustainability of 3M's generous dividend yield, potentially leading to a significant dividend cut. This warning raises concerns about the stock's future performance and investor confidence.
Is 3M Stock a Sell?
Dray's criticism of 3M centers on the company's plans to spin off its Solventum healthcare business, which contributed nearly 10% of 3M's operating profits last year. The loss of this operating income could make 3M's dividend yield unsustainable, potentially necessitating a dividend cut of 50% to 70%. Dray's analysis suggests that investors may need to reevaluate their expectations for 3M's stock.
Risk of Dividend Cut
3M's normalized per-share income has been below the amount of its annual dividend for two consecutive years. If operating income declines further due to the spin-off, a dividend cut becomes more likely. Few analysts have factored in this risk, which could impact the popularity of 3M's stock among income investors.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.