Kimberly-Clark: High Risk Dividend Growth Stock

kc_logo_newKimberly-Clark is a global health and hygiene company with operations in 37 countries. It’s products are sold in more than 150 countries. It has a well-known family care and personal care brands such as Kleenex, Scott, Andrex, Huggies, Pull-Ups, Kotex, Poise, and Depend.

KMB is a dividend aristocrat and member of Mergent’s Broad Dividend Achievers index. I last reviewed KMB in February 2009 (without its 2008 results). At that point in time, it was high risk to dividend stocks. I have made an observation that its dividends would be under pressure. This 2009 dividend growth rate was only 3.4%, which is lower than its historical average of 9.4%. I am reviewing this again for risk to dividends.


Trend Analysis
This section measures the trends for past 10 years of corporation’s revenue and profitability. The parameters should show consistent growth trends. The chart below shows these trends.

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Low Yield Dividend Stocks – What does it mean?

yieldIn last few weeks, I have looked at dividend stocks (aristocrats and achievers) that have dividend yields of less than 2%. There is a school of thought among dividend crowd that low dividend yields will take more than 10, 12, or even 15 years to match income from high yielding CDs or money market accounts. Furthermore, when low yield dividend stocks are compared to high yield dividend stocks, considering conservative dividend growth rates, low yielding stocks will often lag by significant amount. I agree that, mathematically, there is no argument for low yielding dividend stock providing lower income. Purely based on numbers, it is always good to go for relatively higher yield dividends stocks. In general, the cut off used by dividends investors vary such as 2% absolute dividend yield, 3% absolute dividend yield, or dividend yield higher than market (i.e. S&P500 yield).

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