Share-price gains and declines among dividend stocks are usually smaller than they are among sizzling growth stocks.
Kimberly-Clark ( KMB ) offers a good example of why dividend investors sometimes need to adjust their expectations.
Three of Kimberly-Clark's past five breakouts led to gains of less than 7% before a new consolidation began. The other two offered 18% to 20% pops.
On the downside, the lows involved pullbacks of 4% to 14%.
What does this tell investors?
One lesson investors might draw is to alter their buying strategy for dividend stocks. An entry at the 50-day line might make more sense than waiting for the stock to clear the consolidation's high.
Because price gains are routinely modest for dividend stocks, finding an early entry can make a difference in how easy or hard it is to hold the stock. And most people buy dividend stocks with the idea of holding the stock.
Kimberly-Clark is finding support at its 50-day line. Granted, the stock needs a small gain to clear the flat base buy point of 113.19. But in October, the last time Kimberly-Clark cleared a buy point, the ensuing gain was less than 5% before the stock began consolidating.
To hold such a stock, investors need every edge they can get. The 50-day line might provide that edge.
Kimberly-Clark jacked up its quarterly dividend from 81 cents a share to 84 cents a share in Q1. The annualized yield is 3% vs. 1.86% for the S&P 500.
Earnings were flat vs. the year-ago quarter. Revenue fell 1% -- hurt by currency effects. Europe was the chief problem; sales dropped 10.5% vs. the year-ago period.
In October 2012, Kimberly unveiled plans to exit most of the diaper business in Europe and shed lower-margin businesses. Restructuring costs will impact results through 2014.
The company also plans to spin off its health care business in Q3 or Q4.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.