Kimberly-Clark Corp's Dividend Analysis
Assessing the Sustainability of Kimberly-Clark's Upcoming Dividend
Kimberly-Clark Corp (NYSE:KMB) recently announced a dividend of $1.22 per share, payable on 2024-04-02, with the ex-dividend date set for 2024-03-07. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Kimberly-Clark Corp's dividend performance and assess its sustainability.
What Does Kimberly-Clark Corp Do?
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With more than half of sales from personal care and another third from consumer tissue products, Kimberly-Clark Corp sits as a leading manufacturer in the tissue and hygiene realm. Its brand mix includes Huggies, Pull-Ups, Kotex, Depend, Kleenex, and Cottonelle. The firm also operates K-C Professional, which partners with businesses to provide safety and sanitary offerings for the workplace. Kimberly-Clark Corp generates just over half its sales in North America and more than 10% in Europe, with the rest primarily concentrated in Asia and Latin America.
A Glimpse at Kimberly-Clark Corp's Dividend History
Kimberly-Clark Corp has maintained a consistent dividend payment record since 1973, distributing dividends on a quarterly basis. The stock is proudly listed as a dividend king, an honor bestowed upon companies that have increased their dividend each year for at least the past 51 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Kimberly-Clark Corp's Dividend Yield and Growth
As of today, Kimberly-Clark Corp currently has a 12-month trailing dividend yield of 3.81% and a 12-month forward dividend yield of 3.93%, suggesting an expectation of increased dividend payments over the next 12 months. Over the past three years, the annual dividend growth rate was 3.30%, which increased to 3.60% per year over a five-year horizon. Over the past decade, the annual dividends per share growth rate stands at 4.00%. Based on the dividend yield and five-year growth rate, the 5-year yield on cost of Kimberly-Clark Corp stock as of today is approximately 4.55%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Kimberly-Clark Corp's dividend payout ratio is 0.72, which may raise concerns about the sustainability of the company's dividend.
Kimberly-Clark Corp's profitability rank of 7 out of 10 as of 2023-12-31 suggests good profitability prospects. The company has reported positive net income each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
For dividends to be sustainable, a company must exhibit robust growth metrics. Kimberly-Clark Corp's growth rank of 7 out of 10 suggests a good growth trajectory relative to competitors. However, the company's revenue growth rate of approximately 2.60% per year on average underperforms about 64.58% of global competitors. Moreover, the 3-year EPS growth rate of -5.30% per year and the 5-year EBITDA growth rate of -2.40% also underperform compared to many global competitors.
Next Steps
In conclusion, while Kimberly-Clark Corp's consistent dividend history and status as a dividend king are commendable, investors should consider the mixed signals sent by the payout ratio and growth metrics. The payout ratio indicates a potential concern for dividend sustainability, whereas profitability ranks and yield on cost suggest a more positive outlook. The revenue and earnings growth rates, however, may warrant caution for those looking at long-term dividend sustainability. Value investors should weigh these factors carefully, keeping in mind the company's strong market position and brand portfolio. GuruFocus Premium users can further explore high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
