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 46th 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 2018, KMB announced a $0.03 increase to their dividend, bringing the quarterly dividend to $1.00 from last years $0.97. This represents an increase of 3.09%. This announcement beat my expectation of a $0.02 increase. Awesome sauce. Surprisingly, the news of 46 years of consecutive increases and now 84 years straight of paying a dividend, get little to no fan fare. Butt 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 3.49%.
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. An audience watching…
Butt back to the dividend history…
I shit you not when I say this, but KMB is in elite company when it comes to dividends. 46 years of consecutive increases, 84 years straight of paying a dividend, and looking back from 2005 to 2018 an average annual increase to the quarterly dividend of 6.71%, with the average annual payout increasing at 6.87%. During that 13 year time frame, your dividend income more than doubled with a total growth rate of 131%.
KMB vs S&P500
How has KMB performed against the S&P500 over the last decade:
The last year has been a bit shitty for KMB shareholders. Looking at this comparison a year ago, KMB was outperforming the S&P500 by about 20% over the last decade. Fast forward a year later (a difficult year for the company) and KMB is trailing the S&P500 over the last decade by about 20%.
KMB Key Stats:
Market Cap: $40.14 Billion
Dividend Yield: 3.49%
PE Ratio: 17.88
Payout Ratio: 60.63%
Profit Margin: 12.48%
Cash: $616 Million
Debt: $7.49 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.
I like KMB at the current levels. It trades at 114.46, 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! True, I can’t make this up. 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.
I’ll probably be pulling the trigger and adding more KMB to my portfolio very soon.
The Value of $10,000 Invested Long Term
This will be an interesting one to look at. Let’s say you invested $10,000 in KMB on 1/3/2005 (first trading day of the year) and bought in at the closing price of $64.55, meaning you purchased 154 shares (rounded down). Based on the closing price of $114.46, you would have only made 77.31% based on the change in the share price, for a value of $17,626.84.
Now, lets factor in the dividends from 2005 through Q1 2018 (not reinvested). During that time frame, you would have received $5549.40 in dividends. This brings the total value of KMB to $23,176.24 or a total return of 131.17%. Notice also, dividends equated to 55% of your initial purchase of $10,000. Also notice, dividends added 54.04% to your return, reinforcing the notion that dividends do make up a significant portion of total returns. The dividends for KMB equate to 41% of the total return overall during the mentioned timeframe.Follow me on the social medias: