Kimberly-Clark Boosts Shareholder Value


The board of directors of leading health care chain Kimberly-Clark Corporation (KMB) increased its dividend yet again on Feb 25, 2014. Kimberly-Clark hiked its dividend by 3.7% and will now pay 84 cents to its shareholders every quarter, up from 81 cents per share.

This means that Kimberly-Clark will now pay an annual dividend of $3.36 per share, which translates to an annualized dividend yield of 3.05%. However, the new annualized dividend yield is below the current yield of 3.5%. The new quarterly dividend will be paid on Apr 2 to shareholders of record as of Mar 7, 2014.

Kimberly Clark regularly returns value to its shareholders and has increased its dividend every year over the last 42 years. The last increase of 9.5% to 81 cents per share was made in Feb 2013.

The underlying strength of the business and management’s inclination to return value to shareholders led to the dividend hike. Like Kimberly-Clark, other consumer staple companies like Lorillard Inc (LO) and The Coca-Cola Co (KO) recently hiked their dividend by 12% and 9%, respectively in Feb 2014.

Apart from boosting its dividend, the company also returns value to shareholders through share repurchases. The company returned $2.4 billion to its shareholders through share repurchases and dividends in 2013. For 2014, Kimberly-Clark expects to repurchase shares worth $1.3 billion to $1.5 billion.

Last month, Kimberly Clark delivered fourth-quarter 2013 earnings of $1.44 per share, beating the Zacks Consensus Estimate by 2.9% and the prior-year quarter earnings by 5.1%. The upswing in earnings was driven by organic sales growth and cost savings, which made up for increased input costs and currency headwinds.

Organic sales grew 5% backed by higher sales volume and selling prices. The company reported almost flat sales of $5.31 billion in the fourth quarter. Improvement in sales volumes and higher selling prices were offset by foreign currency headwinds, lost sales in conjunction with European strategic changes and pulp and tissue restructuring actions. Revenues however beat the Zacks Consensus Estimate of $5.25 billion by a slight margin.

Currently, Kimberly-Clark holds a Zacks Rank #3 (Hold). Other better-ranked consumer staple company is WD 40 Co (WDFC) which holds a Zacks Rank #2 (Buy).

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