NYSE:KMB) is about to go ex-dividend in just four days. You will need to purchase shares before the 3rd of September to receive the dividend, which will be paid on the 2nd of October.” data-reactid=”28″ type=”text”>Some investors rely on dividends for growing their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that Kimberly-Clark Corporation (NYSE:KMB) is about to go ex-dividend in just four days. You will need to purchase shares before the 3rd of September to receive the dividend, which will be paid on the 2nd of October.
Kimberly-Clark’s next dividend payment will be US$1.07 per share, and in the last 12 months, the company paid a total of US$4.28 per share. Looking at the last 12 months of distributions, Kimberly-Clark has a trailing yield of approximately 2.7% on its current stock price of $156.5. If you buy this business for its dividend, you should have an idea of whether Kimberly-Clark’s dividend is reliable and sustainable. As a result, readers should always check whether Kimberly-Clark has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Kimberly-Clark paid out more than half (56%) of its earnings last year, which is a regular payout ratio for most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Thankfully its dividend payments took up just 49% of the free cash flow it generated, which is a comfortable payout ratio.
It’s positive to see that Kimberly-Clark’s dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
here to see the company’s payout ratio, plus analyst estimates of its future dividends.” data-reactid=”37″ type=”text”>Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we’re glad to see Kimberly-Clark’s earnings per share have risen 14% per annum over the last five years. Kimberly-Clark is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Kimberly-Clark has lifted its dividend by approximately 6.0% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Kimberly-Clark is keeping back more of its profits to grow the business.
From a dividend perspective, should investors buy or avoid Kimberly-Clark? Kimberly-Clark’s growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. It’s a promising combination that should mark this company worthy of closer attention.
1 warning sign for Kimberly-Clark you should be aware of.” data-reactid=”59″ type=”text”>So while Kimberly-Clark looks good from a dividend perspective, it’s always worthwhile being up to date with the risks involved in this stock. Case in point: We’ve spotted 1 warning sign for Kimberly-Clark you should be aware of.
a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.” data-reactid=”60″ type=”text”>A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.