Up to date on January twenty seventh, 2024

Traders in search of high-quality dividend progress shares ought to take a better have a look at the Dividend Aristocrats, a gaggle of 68 corporations within the S&P 500 Index with 25+ consecutive years of dividend will increase.

With this in thoughts, we created an inventory of all of the Dividend Aristocrats.

You possibly can obtain the total spreadsheet of all 68 Dividend Aristocrats, together with a number of vital monetary metrics akin to dividend yields and price-to-earnings ratios, by clicking on the hyperlink beneath:

 

Disclaimer: Positive Dividend shouldn’t be affiliated with S&P World in any manner. S&P World owns and maintains The Dividend Aristocrats Index. The data on this article and downloadable spreadsheet is predicated on Positive Dividend’s personal evaluate, abstract, and evaluation of the S&P 500 Dividend Aristocrats ETF (NOBL) and different sources, and is supposed to assist particular person traders higher perceive this ETF and the index upon which it’s based mostly. Not one of the info on this article or spreadsheet is official information from S&P World. Seek the advice of S&P World for official info.

We evaluate every of the Dividend Aristocrats yearly, and the subsequent inventory on this 12 months’s version is shopper merchandise large Kimberly-Clark (KMB).

Kimberly-Clark has raised its dividend for 52 consecutive years. It is usually a member of the much more unique Dividend Kings record.

The inventory additionally at the moment has a 4% dividend yield, which is greater than double the ~1.6% common dividend yield of the S&P 500 Index.

This text will focus on Kimberly-Clark’s enterprise mannequin, progress potential, and whether or not the inventory is at the moment buying and selling at a pretty valuation.

Enterprise Overview

Kimberly-Clark traces its beginnings again to 1872. 4 younger businessmen, John A. Kimberly, Havilah Babcock, Charles B. Clark, and Frank C. Shattuck, got here up with $30,000 of start-up capital to type Kimberly, Clark and Co.

At present, Kimberly-Clark is a world shopper merchandise firm that operates in 175 nations and sells disposable shopper items, together with paper towels, diapers, and tissues.

It operates via two segments that every home many common manufacturers: Private Care Section (Huggies, Pull-Ups, Kotex, Rely, Poise) and the Shopper Tissue section (Kleenex, Scott, Cottonelle, and Viva), producing over $20 billion in annual income.

Supply: Investor Presentation

Kimberly-Clark posted fourth quarter and full-year earnings on January twenty fourth, 2024. Adjusted earnings-per-share got here to $1.51, which was three cents mild of estimates. Income was flat year-over-year at $4.97 billion. Natural gross sales have been up 3% through the quarter, attributable to a 2% achieve in pricing and a 1% tailwind from favorable product combine.

Progress Prospects

Kimberly-Clark has dedicated to elevating its core manufacturers as one of many three pillars of progress within the coming years. It’ll do that by launching totally different product improvements by way of extensions of current traces and completely new merchandise. The corporate may even proceed to handle its income by way of pricing and blend in addition to promotional methods.

The second progress pillar is accelerating progress in its creating and rising (D&E) markets, which comprise a good portion of the corporate’s gross sales.

KMB will deal with its private care {and professional} segments specifically, with its most important alternatives coming from locations the place it has low class penetration and frequency of utilization.

Kimberly-Clark additionally continues to pursue price financial savings. Kimberly-Clark’s administration crew has repeatedly prolonged this initiative, aiming for one more $1.5 billion of cumulative financial savings over a three-year interval.

We count on 5% annual earnings progress within the years to come back, as we count on volumes to stay largely regular.

Aggressive Benefits & Recession Efficiency

Kimberly-Clark’s most vital aggressive benefits are its manufacturers and world scale. The corporate enjoys a management place throughout its model portfolio and, certainly, the world over.

It retains its aggressive benefits via advertising and innovation. This permits the corporate to remain forward of the competitors. Given its dedication to its progress pillars, we count on it will solely improve over time.

As well as, Kimberly-Clark’s world attain offers the corporate with the effectivity to maintain prices low. The continuing price discount program is an instance of its means to successfully handle prices, at the same time as income grows.

Kimberly-Clark stays extremely worthwhile, even throughout recessions. For instance, it carried out nicely via the Nice Recession of 2007-2009. Its earnings-per-share via the Nice Recession are proven beneath:

• 2007 earnings-per-share of $4.25
• 2008 earnings-per-share of $4.06 (4.5% decline)
• 2009 earnings-per-share of $4.52 (11% improve)
• 2010 earnings-per-share of $4.45 (1.5% decline)

As you’ll be able to see, whereas Kimberly-Clark did see earnings decline in 2008 and 2010, it additionally registered a double-digit progress charge in 2009. The explanation for its sturdy efficiency over the course of the recession is that the corporate sells merchandise that customers want no matter financial circumstances.

Shoppers will at all times want private care merchandise, whatever the situation of the economic system. This provides Kimberly-Clark a sure degree of product demand every year, even throughout recessions.

Valuation & Anticipated Returns

Based mostly on adjusted earnings-per-share of $6.85 for 2024, Kimberly-Clark trades for a price-to-earnings ratio of 17.7.

Excluding outlier years, Kimberly-Clark has traded at a median price-to-earnings ratio of ~18 during the last decade. That is additionally our estimate of truthful worth for the inventory. Due to this fact, shares seem like barely undervalued proper now.

If the inventory valuation expands from 17.7 to 18 over the subsequent 5 years, it is going to enhance annual returns by 0.3% per 12 months.

As well as, future returns can be generated from earnings progress and dividends. Given the corporate’s sturdy manufacturers and progress catalysts, common annual earnings progress of 5% is an affordable expectation. The inventory additionally has a 4.0% dividend yield.

In whole, we see annual returns of 9.3% over the subsequent 5 years. It is a stable anticipated charge of return, however is slightly below our purchase threshold of 10%.

Remaining Ideas

Kimberly-Clark is a high-quality firm with a various portfolio of sturdy manufacturers. It has constructive progress prospects transferring ahead, and it’s an especially dependable dividend inventory. Rising markets, price reductions, and share repurchases will spotlight future earnings progress.

Kimberly-Clark has elevated its dividend for over 50 years in a row and at the moment has a dividend yield of 4%. It, due to this fact, meets our definition of a blue-chip inventory, and it ought to proceed to ship regular dividend will increase every year.

If you’re considering discovering extra high-quality dividend progress shares appropriate for long-term funding, the next Positive Dividend databases can be helpful:

The most important home inventory market indices are one other stable useful resource for locating funding concepts. Positive Dividend compiles the next inventory market databases and updates them month-to-month: