Kimberly-Clark Declares $1.28 Quarterly Dividend, Payable January 5

Kimberly-Clark will pay $1.28 per share on Tuesday, January 5, a quarterly dividend declared on Wednesday, November 11 that annualizes to $5.12 and a yield of 4.8 percent. Shareholders of record on Friday, December 4 receive the payment. The ex-dividend date is also Friday, December 4, so buyers arriving after that date arrive too late for this particular distribution.

The number that matters to income desks is coverage. The company carries a dividend payout ratio (the share of earnings paid out as dividends) of 67.0 percent, which indicates the dividend is sufficiently covered by earnings. Equities research analysts expect the company to earn $7.10 per share next year, implying a future payout ratio of 72.1 percent. The distribution, in short, remains affordable under consensus arithmetic.

What did the latest quarter deliver?

Kimberly-Clark reported earnings on Thursday, November 5, posting $1.70 in earnings per share for the quarter. That beat analysts' consensus estimates of $1.65 by $0.05. A year earlier the firm posted $1.82 per share, so the comparison is unflattering.

Revenue told a flatter story. The business booked $4.13 billion for the quarter, matching analysts' expectations of $4.13 billion to the decimal. Revenue fell 1.2 percent on a year-over-year basis.

Profitability metrics remain, on paper, striking:

• Net margin: 19.93 percent (the share of revenue kept as profit)
• Return on equity: 114.93 percent, a figure flattered by leverage
• Analysts anticipate $6.93 in earnings per share for the current fiscal year

How does the balance sheet look?

The valuation and leverage picture is mixed but coherent. The stock opened at $107.19 on Friday. The company carries a debt-to-equity ratio of 1.91, a quick ratio of 0.65 and a current ratio of 0.89 — short-term coverage that is thin, though not unusual for a staples business with dependable cash generation.

The trading ranges frame the story:

• 52-week low: $92.42; 52-week high: $116.82
• 50-day moving average: $102.68; 200-day moving average: $103.39
• Market capitalization: $35.65 billion
• Price-to-earnings ratio: 10.82; PEG ratio (P/E relative to earnings growth): 6.07
• Beta (sensitivity to market swings): 0.25

A beta of 0.25 is the quiet star of that list. The stock moves roughly a quarter as much as the market, which is precisely the profile income investors claim to want and rarely find at a 4.8 percent yield.

What is behind the numbers?

Kimberly-Clark is a global consumer products company that develops and sells personal care, tissue and hygiene products. Its offerings include diapers and training pants, feminine care and adult incontinence products, facial and bathroom tissues, paper towels and wipes.

The portfolio includes Huggies, Kleenex, Scott, Cottonelle, Depend, Poise and Kotex. The company also supplies businesses and institutions, including workplace and professional-use tissue and hygiene products.

What is the verdict?

The dividend is declared, covered and cheap to finance at a 67.0 percent payout ratio. The quarter beat on earnings, missed on growth and matched on revenue. For a company priced at 10.82 times earnings with a 4.8 percent yield, the market appears to have priced in most of the pessimism already. Whether that constitutes a bargain depends on one's tolerance for flat revenue. The dividend, at least, does not appear to be in peril.