Unilever plc (ADR) (UL): How Kimberly Clark Corp (KMB)’s Dividend Keeps Getting Bigger

Dividend investors look for different things from the stocks they choose, with some looking for high yields while others want solid dividend growth. Kimberly Clark Corp (NYSE:KMB) is a rare example of a stock that has something for everyone, with a yield that’s well above average combined with a long track record of raising its dividend payouts annually. With 41 straight years of dividend increases, Kimberly-Clark qualifies for membership in the elite ranks of the Dividend Aristocrats, joining just a few dozen stocks that have put together 25-year track records of annual raises in their payouts.

Kimberly Clark Corp (NYSE:KMB) is the company behind the Kleenex brand name, with a wide array of personal- and health-care products as well as tissues and sanitizers. Households throughout the U.S. and around the world regularly rely on Kimberly-Clark’s products, helping the company maintain consistent financial performance even in challenging markets. Let’s take a closer look at Kimberly-Clark to see whether it’s likely to be able to sustain or even improve on its dividend growth.

Dividend Stats on Kimberly-Clark

Source: Yahoo! Finance. Last increase refers to ex-dividend date.

Can Kimberly-Clark give investors everything they want?
On top of a strong yield and consistent dividend growth, Kimberly Clark Corp (NYSE:KMB) has seen its shares rise dramatically over the past several years, hitting all-time record highs during the spring of 2013. Share-price gains of almost 20% over the past year have built on a longtime track record of success, with total returns of about 11% annually since 1993.

Kimberly Clark Corp (NYSE:KMB)’s relatively modest size doesn’t keep it from being competitive even in a crowded industry worldwide. The Procter & Gamble Company (NYSE:PG) and Unilever plc (ADR) (NYSE:UL) are global giants with much larger market capitalizations and revenue figures, yet Kimberly-Clark has defied their potential dominance and managed to rank No. 1 or No. 2 in market share for its top brands in 80 different countries across the globe.

Still, more recently, investors seem to have gotten more sensitive to Kimberly-Clark’s share-price valuation. With the stock fetching a trailing earnings multiple above 20, Kimberly Clark Corp (NYSE:KMB) is fairly pricey for a stock with modest growth prospects. Moreover, rising costs have pressured margins throughout the industry, putting a lid on potential earnings increases and thereby making it even harder for the company to justify a rich multiple despite its healthy dividend yield.

We’ve also seen rising interest rates in the bond market put pressure on dividend stocks more generally. As bond yields rise, dividend yields have to rise in tandem in order to maintain their relative attractiveness. That in turn tends to push share prices down. Combined with valuation concerns, the impact on Kimberly Clark Corp (NYSE:KMB) has been to knock about 10% off its shares in recent months.

Kimberly-Clark Dividend data by YCharts.