Markets

Published: September 11, 2023
Updated: September 11, 2023

Long-Term Investors in 3M India Reap 82% Rewards: A Five-Year Analysis

A Rewarding Five-Year Journey

Investors who put their faith in 3M India five years ago have been handsomely rewarded, with a whopping 82% return on their investment. Although the share price has only risen by 72% during this period, the dividend payments have contributed significantly to the total shareholder return.

Earnings Growth in Line with Share Price

A closer look at the company's financials reveals that the earnings per share (EPS) have grown at a compound rate of 13% per year over the last five years. This growth is remarkably in sync with the annualized share price gain of 12% per year. The share price seems to have largely reflected the EPS growth, indicating that investor sentiment hasn't shifted dramatically.

Dividend Payments Boost Total Shareholder Return

The total shareholder return (TSR) takes into account dividend payments and other factors, providing a more comprehensive picture. In this case, the TSR for 3M India over the last five years stands at 82%, exceeding the share price return. This is largely due to the company's dividend payments, which have contributed significantly to the total return.

A Mixed Bag in the Short Term

While the longer-term returns look promising, the shorter-term performance has been less impressive. The TSR for the last twelve months stands at 8.5%, falling short of the market return. However, the company's ability to execute and deliver profits over the longer term is encouraging.

A Gem to Hold

3M India's five-year journey has been rewarding for long-term investors, with a total shareholder return of 82%. While the short-term performance may be less impressive, the company's ability to grow earnings and deliver dividends makes it an attractive proposition for investors. As with any investment, it's essential to consider the risks and weigh them against the potential rewards.