Kimberly Clark is a $39 billion business that’s based out of Dallas, Texas. The company employs 42,000 people and pulled in $18 billion in sales last year. That roughly $435,000 per employee.
The company runs within the consumer sector and maintains a solid credit rating (A) from the S&P. This allows Kimberly Clark to issue cheap debt to expand operations and finance other initiatives like dividend payouts.
Many investors focus on the Kimberly Clark’s dividend and it hasn’t disappointed. The company has paid a dividend for over 80 years and has consecutively raised it for over 40 years. This long history gives great insight to Kimberly Clark’s value. Let’s look at the dividend trends over the last decade…
Kimber Clark 10-Year Dividend History
The company paid investors $2.32 per share a decade ago. Over the last 10 years, the dividend has climbed to $3.88. That’s a 67% increase and you can see the annual changes below…
The compound annual growth is 5.3% over 10 years and over the last year, the dividend climbed 5.4%. The slight increase in dividend growth is a good sign. Let’s check out the dividend yield…
Current Dividend Yield vs. 10-Year Average
Kimberly Clark’s long history of paying dividends makes it one of the best dividend stocks around. This also makes the dividend yield a great indicator of value. A higher yield is generally better for buyers.
The dividend yield comes in at 3.55% and that’s below the 10-year average of 4.38%. The chart below shows the dividend yield over the last 10 years…
The lower yield shows that investors have pushed the company’s market value up. They might be expecting higher growth and payouts. But more often than not, the dividend yield is mean reverting with share price changes. This is part of dividend yield theory.
Improved Kimberly Clark Dividend Safety Check
Dividend investors use the payout ratio to determine dividend safety. They look at the dividend per share divided by the net income per share. So a ratio of 80% would mean that for every $1 Kimberly Clark earns, it pays investors $0.80.
The dividend payout ratio is a useful indicator of dividend safety… but accountants manipulate net income. They adjust for goodwill and other non-cash items. A better metric is free cash flow.
Here’s the Kimberly Clark dividend payout ratio based on free cash flow over the last 10 years…
The ratio is volatile over the last 10 years and the trend is up. The last reported year shows a payout ratio of 64%. This gives room for Kimberly Clark’s board of directors to increase the dividend.
Overall, the Kimberly Clark dividend is safe for now. Although, the yield is lower since investors have bid up the price. There are dividend stocks with higher yields. You might want to shop for better dividend stocks in the current market.
If you’re interested in seeing more dividend research, please comment below. You can also check out our free dividend reinvestment calculator.
Good investing,
Robert
