Up to date on January twenty seventh, 2024

Traders searching for high-quality dividend development 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 may obtain the complete 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: Certain Dividend will not be affiliated with S&P World in any manner. S&P World owns and maintains The Dividend Aristocrats Index. The knowledge on this article and downloadable spreadsheet is predicated on Certain 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 primarily based. Not one of the info on this article or spreadsheet is official knowledge 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 big Kimberly-Clark (KMB).

Kimberly-Clark has raised its dividend for 52 consecutive years. Additionally it is 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, development potential, and whether or not the inventory is at the moment buying and selling at a sexy 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.

Right now, Kimberly-Clark is a world shopper merchandise firm that operates in 175 international locations and sells disposable shopper items, together with paper towels, diapers, and tissues.

It operates by way of two segments that every home many standard manufacturers: Private Care Phase (Huggies, Pull-Ups, Kotex, Rely, Poise) and the Client Tissue phase (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 gentle of estimates. Income was flat year-over-year at $4.97 billion. Natural gross sales have been up 3% in the course of the quarter, attributable to a 2% acquire in pricing and a 1% tailwind from favorable product combine.

Development Prospects

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

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

KMB will give attention to its private care {and professional} segments particularly, with its most vital 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 group has repeatedly prolonged this initiative, aiming for one more $1.5 billion of cumulative financial savings over a three-year interval.

We anticipate 5% annual earnings development within the years to come back, as we anticipate volumes to stay largely regular.

Aggressive Benefits & Recession Efficiency

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

It retains its aggressive benefits by way of advertising and innovation. This enables the corporate to remain forward of the competitors. Given its dedication to its development pillars, we anticipate this can solely enhance over time.

As well as, Kimberly-Clark’s international attain supplies the corporate with the effectivity to maintain prices low. The continuing price discount program is an instance of its capability to successfully handle prices, whilst income grows.

Kimberly-Clark stays extremely worthwhile, even throughout recessions. For instance, it carried out effectively by way of the Nice Recession of 2007-2009. Its earnings-per-share by way of 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% enhance)
2010 earnings-per-share of $4.45 (1.5% decline)

As you possibly can see, whereas Kimberly-Clark did see earnings decline in 2008 and 2010, it additionally registered a double-digit development fee in 2009. The explanation for its robust efficiency over the course of the recession is that the corporate sells merchandise that buyers want no matter financial circumstances.

Customers will at all times want private care merchandise, whatever the situation of the economic system. This offers Kimberly-Clark a sure degree of product demand annually, 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 can enhance annual returns by 0.3% per 12 months.

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

In complete, we see annual returns of 9.3% over the subsequent 5 years. This can be a strong anticipated fee 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 robust manufacturers. It has optimistic development prospects transferring ahead, and it’s a particularly dependable dividend inventory. Rising markets, price reductions, and share repurchases will spotlight future earnings development.

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

In case you are keen on discovering extra high-quality dividend development shares appropriate for long-term funding, the next Certain Dividend databases can be helpful:

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