WARNING: Lots of Poop Jokes Ahead

The company that makes products which absorbs/cleans up the waste that comes out of the human body has announced their 45th year with a consecutive dividend increase.  Kimberly Clark, the maker of Huggies, Kleenex, Kotex, Pull Ups, Scott, Viva, Cottonelle, and Depends among other brands is my typical boring yet sexy as fuck holding.  Not only do they have a stranglehold on human waste absorbtion at home, but next time you “take the browns to the super bowl” at work on the clock (I’m talking about taking a shit on the clock at work- ah, now you get the joke) look at the name on the toilet paper dispenser, paper towel dispenser, and the awkward toilet seat cover dispenser… I bet you’ll see Kimberly’s name proudly displayed.  Something to think about next time you take a shit at work vs just looking up crap on your phone.  Hopefully you get to take a shit at work in private…

Yep, that’s probably everyone’s worst nightmare just above.

So, for 2017, KMB announced a $0.05 increase to their dividend, bringing the quarterly dividend to $0.97 from last years $0.92.  This represents an increase of 5.43%.  This announcement beat my expectation of a $0.04 increase.  Awesome sauce.  Surprisingly, the news of 45 years of consecutive increases and now 83 years straight of paying a dividend, go little to no fan fare.  I guess that happens when the earning release was pretty solid and the stock price jumps over $4.00 for the day.  But readers of this site, know those slow and steady increases add up to big money over time.  The current dividend yield on KMB stands at a healthy 3.21%.

KMB Dividend History:

Lets get serious for a second and look at the dividend history for KMB going back to 2005.

No, that is probably everyone’s worst nightmare.

But back to the dividend history…

I shit you not when I say this, but KMB is in elite company when it comes to dividends.  45 years of consecutive increases, 83 years straight of paying a dividend, and looking back from 2005 to 2017 an average annual increase to the quarterly dividend of 7.01%, with the average annual payout increasing at 7.14%.  During that 12 year time frame, your dividend income more than doubled with a total growth rate of 125%.

KMB vs S&P500

How has KMB performed against the S&P500 over the last decade:

KMB div

Since about the late summer of 2016, KMB has stumbled a bit.  Despite the most recent correction, looking back at the last 10 years, KMB has still outpaced the performance of the S&P500 at the same time sporting a much better yield.

KMB Key Stats:

Market Cap: $43 Billion

Beta: 0.62

Dividend Yield: 3.21%

PE Ratio: 22

Payout Ratio: 66.18%

Profit Margin: 11.90%

Cash: $923 Million

Debt: $7.63 Billion

The payout ratio allows for future increases to continue.  I wish the debt was a little lower.  PE is fair given today’s environment and a lot better than most consumer staples.

Conclusion:

I like KMB at the current levels.  It trades at 120.98, sports a solid dividend yield and has room to continue the dividend streak.  2 things that can benefit KMB: China’s continued incontinence issues and exchange rate opportunity.  There’s definitely something in the water in China.  They have a huge adult population who wear adult diapers and it’s growing.  For exchange rates, I think an eventual weakening in the dollar will benefit all US multinationals that have experienced weaker earnings growth due to the recent years of dollar strength.  The reversal of the dollar strength will probably take about 2 years to reverse.  I have been long KMB for a very long time and don’t have any plans to sell for a really long time.  For 2018, I am expecting a 4-5 cent increase to the dividend.

 

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