Strong dividend history
Kimberly-Clark (KMB) has a strong track record of rewarding its shareholders with increased dividends and share repurchases. In 2016, the company returned $2.1 billion to its shareholders through $0.8 billion in share buybacks and $1.3 billion in dividends.
Dividend growth and yield
Kimberly-Clark is a dividend aristocrat, which means it has increased its dividends for more than 25 years in a row. In fact, it has increased its dividends for 45 consecutive years. During the 4Q16 conference call, management announced a 5.4% hike in its annual dividend to $3.88 from $3.68.
Simply put, a dividend yield indicates how much cash flow investors could potentially receive for every dollar they invest in a company. Kimberly-Clark’s current dividend yield is 2.9% based on its closing price of $133.1 as of April 12, 2017.
By comparison, Kimberly-Clark’s current dividend yield is higher than that of Colgate-Palmolive (CL) and Clorox (CLX), who have dividend yields of 2.2% and 2.4%, respectively. However, it’s lower than that of Procter & Gamble (PG), which has a current dividend yield of 3.1%.
This growth in dividends is supported by the company’s ability to generate strong cash flows. In 2016, Kimberly-Clark’s cash from operations stood at $3.2 billion, up about 40% YoY (year-over-year).
Going forward, the company remains committed to boosting its shareholder returns through share buybacks and dividends. In 2017, the company plans to return about $2.2 billion and $2.4 billion to its investors in the form of dividends and share repurchases, respectively. The company expects to buy back shares worth $0.8 billion to $1.0 billion in 2017.
As a dividend aristocrat, Kimberly-Clark is included in the holdings of the SPDR S&P Dividend ETF (SDY), which invests in companies that have increased their dividends for at least 20 consecutive years. SDY has about 1.4% of its holdings in Kimberly-Clark.
In the next part of this series, we’ll focus on analyst ratings for Kimberly-Clark.