The revenue season is a great opportunity to stay up to date on where your businesses are and where they are heading. This revenue season is extremely important as much has changed over the past three months and could potentially put a wrench into the company’s short-term guidance.
Consumer staple giant Kimberly Clark(NYSE: KMB) It just reported weaker results than expected, cutting out its full-year outlook. The company has a wide range of daily brands and specialized products, mainly paper, ranging from paper to toilet paper to diapers and feminine products.
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Kimberly Clark’s stable demand for products has allowed the economy to raise dividends for 53 years in a row, earning a much-needed place on that list. Dividend King. The stock generated 3.8% at the time of this writing, making it a solid source of passive income.
Here’s why Kimberly-Clark is a reliable dividend stock you can buy now for risk aversion investors:
Image source: Getty Images.
When Kimberly Clark provided its first outlook for 2025 in late January, tariff talks were far less tense.
The company initially hoped that organic sales growth in 2025 would surpass competing categories and the country’s weighted average by 2%. That guidance has since been reduced to the 1.5% range from 2%. The most important guidance cut was to adjust earnings per share (EPS). This is expected to be flat to positive on a constant currency basis compared to previous guidance for medium to high single-digit growth.
Kimberly-Clark also forecasts $2 billion of free cash flow (FCF) compared to previous forecasts of over $2 billion.
For longtime Kimberly Clark investors, inactive growth is nothing new. As you can see in the next chart, Kimberly Clark stock prices have been stagnant over the past decade, with operating margins consistently in the mid-October range, with revenues being modest in recent years.
Like me My colleague Eric Wurgmann Companies should not use trade tensions as an excuse for overwhelming outcomes. And for years, Kimberly Clark has been slowing down the performance of the peer group.
Last year, the company launched a multi-year power care strategy. This has reorganized the company into three segments: North America, International Personal Care and International Family Care. This movement is intended to streamline operations, increase flexibility and simplify reporting structure. However, as Kimberly Clark’s latest guidance suggests, the impact of power care strategies will take time to achieve.
Kimberly Clark isn’t at the top of the game, but not for a few years. However, the company has several key factors that could appeal to risk averse investors.
For starters, the dividends are reliable. Even with FCF guidance cuts by $2 billion, Kimberly-Clark can fully support its capital return program with cash. In the most recent quarter, it returned $466 million to shareholders through buybacks and dividends.
Secondly, Kimberly Clark improved his balance sheet by reducing his debt. Its net long-term debt is $6.7 billion, close to its lowest level in 10 years.
Finally, Kimberly Clark shares trade at a ratio of just 18.3 with a price-to-revenue (P/E) ratio, compared to the median P/E of 23.1. With slightly positive EPS guidance from the flat in the current year, Kimberly Clark is definitely still a bargain at these levels.
Kimberly Clark may not be growing actively, but that’s not necessarily a bad thing for investors who are primarily focused on supplementing their income. Stocks are of good value compared to their more expensive industry peers.
for example, Proctor & Gamble Another consumer staple dividend king has grown modestly, but gets 26.7 p/e while paying a low yield of 2.7%. P&G is a better business and is worth buying for investors who prioritize quality, but Kimberly Clark is better worth it and has a higher chance of passive income.
The company tore the proverb bandage by cutting growth forecasts this year. With expectations being put in place, Kimberly Clark has amazing room upside down. And during that time, a significant 3.8% yield provides a valuable incentive for investors to hold the stock.
Consider this before purchasing stock at Kimberly Clark.
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