12:10 PM EST, 03/07/2024 (MT Newswires) -- 3M ( MMM ) could lose its dividend aristocrat title as it might need to cut its dividend by 50% to 70% to reset current yield and preserve capital to fund mounting legal liabilities, RBC Capital Markets said in a note Wednesday.

The spinoff of its healthcare business Solventum, set for April 1, could be an opportunity for 3M ( MMM ) to right-size its dividend, with the combined dividend payout seen to be below the current 3M ( MMM ) dividend, but "would be optically less glaring than an outright cut," according to the note.

3M ( MMM ) has to pay about $6 billion over seven years in the combat arms earplugs litigation settlement in addition to the pending settlement of $10.3 billion to $12.5 billion related to drinking water contamination with Per- and Polyfluorinated Substances, or PFAS, RBC said.

"The still unaddressed and potentially larger PFAS liabilities include US wastewater utilities, personal injury damages all international claimants and claims the US government may pursue against 3M ( MMM ) for costs associated with a Superfund PFAS cleanup," the investment firm said.

RBC said the company's stock faces an incremental risk in reducing the dividend as "several former dividend aristocrats experienced significant stock price declines following dividend cuts."

The investment firm reduced 3M's ( MMM ) price target to $84 from $85 and reiterated its underperform rating.

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