Showing posts with label KMB. Show all posts
Showing posts with label KMB. Show all posts

Friday, January 26, 2018

Avoiding KMB

logoKimberly Clark, symbol KMB, is a house hold name.  I am avoiding it.  D/E ratio is quite high. 

https://www.fool.com/investing/2018/01/25/kimberly-clark-corp-shifts-strategies-after-its-se.aspx


KMB is starting lay offs and perhaps that will help but they are also increasing dividends, not a good way to husband cash.  KMB's most recent dividend is 3% versus previous dividend increases of 5%.   To their benefit, dividends paid are only 63% of Earnings.


The debt scares me.


Source:  Ycharts D/E ratio for KMG 25.92

M* MoneyMadam

Disclosure:  I do not have a position in KMB.  I lost it to a call buyer at $103 so I have lost out on the upside as KMB is trading at just over $120.

KMB is in my published 2011 portfolio.  I  bought at $65.06 but with the HYH spin off, the portfolio basis is $59.93.



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Monday, February 27, 2017

KMB spin off

Good news for this KMB spin off. M*

Halyard Health beats by $0.06, beats on revenue http://seekingalpha.com/currents/post/3246628?source=ansh-d $HYH

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Friday, January 24, 2014

Dividend Aristocrats and The Money Madam's Dividend Strategy

January 20, 2014

I just read a Seeking Alpha Article about nine dividend companies for yield and growth. (click to read article)
I applied my four Dividend Machine Criteria and here is what I found.

On a pass/fail basis we have seven that fail the Dividend Machine criteria and two that are close.

Take a look at the data.



If I were going to buy something that is not quite a Dividend Machine due to a yield that is too low, I would go with the stock that the greatest dividend increase over the past five years.

And those companies are: MCD, CVX, KMB, PG, and KO

The Money Madam
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Wednesday, November 13, 2013

Dividend Champions and Dividend Machines - four good values



Seeking Alpha published a terrific article that provided an extensive review of dividend champions at sound valuations.   The article is very thorough and I read it with interest.  I always like to compare my dividend machine strategy with other professionals.  My post looks at the four companies these two strategies have in common.  Here is the link to the Seeking Alpha article.


 
Difference between Dividend champions and Dividend Machines


Dividend champions have increased the dividend for 25 years.   My dividend machines have increased the dividend for more than 5 years (7 years in 2013.)


Dividend machines have to pay at least three percent and in 2013 we want closer to four percent.  Dividend champions do not have to meet that hurdle.



Four Stocks common to both strategies:  KMB, MCD, SYY, CVX


Of the many stocks profiled in the Seeking Alpha article, I found four that meet the four criteria I use to call a stock a dividend machine.   Incidentally, the author, Chuck Carnevale states he is long all four of these stocks. 
  

I have been trying to make sense of my historical data on these four stocks and Mr. Carnevale nailed it. Of the four stocks we both agree that KMB is pricey, MCD and SYY fully valued, and CVX a potential buy. 


Let’s look at each company’s dividend machine fundamentals; the data are presented in the tables below.  I have grouped McDonald’s (MCD) and Sysco (SYY) together as they are considered fairly valued; then Kimberly Clark (KMB) which is overpriced and Chevron (CVX) which seems to be the best value.


Dividend Machine Fundamentals of MCD & SYY






Kimberly Clark (KMB), considered a bit pricey at the time I conceived this article, broached the three percent dividend yield minimum today when it closed above $108.   I guess we were right; KMB’s dividend machine fundamentals are presented below along with Chevron (CVX.)  



Dividend Machine Fundamentals of KMB & CVX






My take is that when you can acquire stocks like KMB and CVX with yields greater than three percent do it because their dividend increase potential makes them better investments for income investors than a slow growth four percent yielding stock.


The Money Madam
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Tuesday, August 27, 2013

Dividends and Income –Breaking News - Kimberly Clark has covered call options



How often am I asked “what is my entry point” on any given stock?   My answer is always the same; I use my four dividend machine criteria to guide me.     



When a company meets all four of the criteria I use to define a dividend machine (EPS greater than the dividend; dividend of greater than three percent; dividend increases every year for a minimum of seven years and D/E ratio of one or less or equal to industry standards), I almost always begin a position in that stock or I add to it, if I already own it.



My newest 2013 stock to qualify as a dividend machine is Kimberly Clark, symbol KMB.   In February of 2011, KMB also was a dividend machine. Click here for a link to that post.  In 2011 the stock price was $65.06 and the dividend yield was 4.8 percent.   In 2012, KMB stock price appreciated quite a bit and I did not include it in that portfolio.




I held KMB until it reached a high of $106 in early 2013.   The current dividend yield at that price had slipped to barely three percent and I locked in a big gain by setting a stop at $103.  My stop was hit and I moved that money into another stock that paid more than three percent.




Today, I am again interested in KMB.   Not only does this fine company qualify as a dividend machine, it has an interesting covered call that is fit for an income investor.  Let’s take a look at the dividend machine fundamentals of KMB and then at the covered call.  




KMB - DIVIDEND MACHINE FUNDAMENTALS:


This table presents KMB’s dividend machine fundamentals.   At the close on Monday, August 26, 2013, KMB traded at $94.53 nearly a ten percent correction from where I sold it.   Earnings are $4.51 per share with dividends at $2.64 the yield is 3.38%.  Debt to equity is 1.53 which is pretty typical for KMB and less than other companies in this space.  



I do not use sentiment or trends to guide me to buy a stock.  I use these dividend machine criteria and that strategy has worked out very well.  Just on the dividend machine fundamentals, I am interested in adding KMB for income.  But the covered call opportunity is what sends this stock to the stop of my list for tomorrow, Tuesday August 27.




KMB - COVERED CALL OPPORTUNITY


I am partial to companies that provide more than just dividend income; I like stocks with both dividend and covered call income.   Covered call income is usually associated with growth stocks rather than a stogy company like KMB.



The call I have in mind is a January $100 for a premium of $1.53 per share.   It is rare to find that kind of income on a stock like KMB.   Furthermore, going out to January means that if I hold the stock until expiration, I will also receive two dividends.   This table shows the gain from this covered call.   




If I lose KMB again at $100, it will be my pleasure to pocket the more than 9 percent gain.   If KMB just hangs around in the mid $90’s and I still own it, I have the pleasure of at least a 3.38% dividend yield on a stock that has increased the dividend for 41 consecutive years.   Moreover, I always get to keep the call premium which in and of itself is a yield of 1.62 percent.


A Money Madam’s dividend and income strategy for conservative income investors.  



THE MONEY MADAM
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