Over the past 10 years Kimberly-Clark Corporation (NYSE:KMB) has returned an average of 4.00% per year from dividend payouts. The company is currently worth US$35.58B, and now yields roughly 3.93%. Let’s dig deeper into whether Kimberly-Clark should have a place in your portfolio. See our latest analysis for Kimberly-Clark
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share risen in the past couple of years?
- Does earnings amply cover its dividend payments?
- Will it be able to continue to payout at the current rate in the future?
Does Kimberly-Clark pass our checks?
Kimberly-Clark has a trailing twelve-month payout ratio of 76.17%, which means that the dividend is covered by earnings. However, going forward, analysts expect KMB’s payout to fall to 56.83% of its earnings, which leads to a dividend yield of 4.12%. However, EPS should increase to $5.16, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. In the case of KMB it has increased its DPS from $2.32 to $4 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. In terms of its peers, Kimberly-Clark generates a yield of 3.93%, which is high for Household Products stocks but still below the market’s top dividend payers.
With this in mind, I definitely rank Kimberly-Clark as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three important factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for KMB’s future growth? Take a look at our free research report of analyst consensus for KMB’s outlook.
- Valuation: What is KMB worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether KMB is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.