Which Aristocrat is next? | Dividend cut from 3M or Walgreens

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Is 3M the next Aristocrat to announce a dividend cut?

After the stunning dividend cut by Dividend Aristocrat VF Corp (VFC) many investors are speculating about the next company with a great track record to announced a dividend cut. A recent Twitter poll shows that 3M (MMM) is more likely than Walgreens Boots Alliance (WBA) to cut its dividend.

VF Corporation announced a big dividend cut in 2023, ending 51 consecutive years of increased dividend by the (former) Dividend Aristocrat. This came after a more expected dividend cut by telecom giant AT&T in 2021, ending 37 consecutive years of dividend growth.

Now many people are curious about the next Dividend Aristocrat to announce a dividend cut, following VF Corporation. If we look at dividend growth, this mostly is a good indicator for future dividend cuts of suspensions, in particular when a company with big hikes annually suddenly starts doing very small hikes just to keep up the track record and Aristocrat status. This is exactly what happened to AT&T, with smaller dividend hikes an no increases in 2019 and 2020 prior to the big dividend cut in 2021. 

We see a similar development with VF Corp, announcing small 2% hikes from 2020 through 2022 following big double digit hikes in the years before. Eventually this resultated in the big dividend cut in 2023. This also ended the Aristocrat status for the outdoor apparel- and shoe maker.

So looking at Aristocrats with a slowing dividend growth we see weakness with especially 3M (MMM) and Walgreens Boots Alliance (WBA), two companies that have been doing terrible based on stock price the last couple of years, with inflation and competition hurting Walgreens and lawsuits bringing down 3M.

3M only did 0.7% dividend hikes in the last three years, clearly to keep the track record alive. Walgreens also did not impress lately with a record low dividend hike of 0.5% this year preceeded by 2.1% and 2.2% hikes in the previous two years. No surprise is that both 3M and Walgreens have big dividend yields because of their falling stock prices. The recent Twitter poll shown above shows us that investors expect 3M to be the most likely company to announce a dividend cut.

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