Kimberly-Clark Hikes Dividend Payout, Plans Spinoff


Even if the economy is struggling, people still need consumer staples such as tissues, toilet paper and diapers.

That's helpedKimberly-Clark ( KMB ) post fairly steady profit and sales growth over the years, as well as provide a steady return to shareholders. The consumer goods giant hasn't been immune to softer spending -- it saw flat sales the past two quarters.

But that hasn't affected its dividend track record. The company last month set a quarterly dividend of 81 cents a share. The 2013 payout marked a 9% increase from 2012. Kimberly-Clark has paid out a dividend for 79 years and has hiked the rate for 41 years in a row.

Its 81-cent dividend adds up to $3.24 for the year, for an annualized yield of 3.1%, above the S&P 500's 1.9%. The payout is also higher than some other personal care product makers, includingProcter & Gamble 's ( PG ) 2.9% andColgate-Palmolive 's ( CL ) 2.1%.

The maker of Huggies diapers and Kleenex tissues gets a 2 for its three-year Earnings Stability Factor, on a scale of 0 to 99, where the lower number indicates greater stability. Its five-year factor is 4.

Though analysts recently lowered their full-year earnings estimate, they still expect 9% growth this year and 7% the next.

Kimberly-Clark's return on equity has held above 30% the past seven years, well above the 17% threshold investors should seek. Its ROE in 2012 was 40.6%.

It also announced plans last month to spin off its health care unit, which sells surgical gowns, face masks, catheters and other medical gear. The spinoff, if approved by the company's board, is expected to be finalized in the third quarter of 2014 and would create a stand-alone public company with about $1.6 billion in annual net sales.

The stock is up 24% this year, nearly in line with the S&P 500's 29% gain. It may be consolidating again after clearing a six-month, saucer-shaped base in late October.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Investing Ideas

Referenced Stocks: CL , KMB , PG

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