Will 3M’s Extraordinary Item Impact its Cash Flow and Dividends?

July 2023's Finance 'In-Action' discusses 3M's $12.5B settlement and its relation to Extraordinary Items and Cash Flow.

  • 3M Multibillion-Dollar Settlement is Bad News for Its Dividend.

  • “…3M announced a deal to pay as much as $12.5 billion over 13 years to resolve lawsuits from US cities…”. Is this an extraordinary event?  Should its performance be Normalized to offset this settlement?  “3M is facing more than 200,000 lawsuits…”.

  • “…3M businesses won’t have enough cash left over…to support keeping the overall dividend whole….” This point highlights that 3M’s cash from operating activities will need to fund the settlement, which reduces the ability to pay dividends (use of cash relating to financing activities).  “3M could borrow to fund the settlement payouts, but its debt load will balloon…”. Borrowing is a source of funds relating to financing activities.

  • “3M is a dividend aristocrat; it has paid dividends without interruption for more than a century and has raised the shareholder payout annually for more than 60 years.” We’ll wait and see if it’s still considered an aristocrat.


3M Multibillion-Dollar Settlement Is Bad News for Its Dividend, Bloomberg, June 26, 2023.

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