A Dividend King is a company that has increased its dividend for at least 50 years in a row. There are currently only 57 that can wear this crown.
One of them is Kimberly-Clark (NASDAQ: KMB), the venerable company that makes tissues, paper towels, diapers, and other paper-based family-care products. It has increased its dividend for 54 straight years, making its stock a Dividend King. But it also pays out one of the highest yields among Dividend Kings — 4.7% right now. The combination makes it one of the best, most reliable dividend stocks you can buy.
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But the stock is not just a buy for its royal dividend — it's also positioned to deliver some solid returns. Here's why.
Kimberly-Clark stock is up about 11% year to date (with dividends reinvested), but its total returns are down about 10% over the past 12 months. Its long-term returns aren't great either, as it averaged a drop of 1% over the past five years and a total rise of only 1% over the past decade.
Its main utility for investors has been to provide excellent dividend income, and some downside protection when markets go south. But some recent developments could position the company to generate some decent returns.
Earlier this month, Kimberly-Clark struck a deal with pulp supplier Suzano (NYSE: SUZ) to form a new paper products company, Arbex. This benefits Kimberly-Clark by offloading its lower-margin paper-towel and tissue business, allowing it to focus on its higher-margin personal-care products. Kimberly-Clark also has a licensing agreement with Arbex to license its paper brands, so that will generate some licensing royalties.
More importantly, it frees up resources for Kimberly-Clark to integrate its pending acquisition of Kenvue (NYSE: KVUE).
Kenvue, which makes skincare products like Aveeno and consumer health products like Band-Aid, Tylenol, and Listerine (to name just a few), spun off from Johnson & Johnson in 2023. Kimberly-Clark sees it as a complementary fit, creating a global health and wellness leader, and expects the combination to maximize each company's strengths and accelerate growth.
Kimberly-Clark anticipates approximately $1.9 billion in cost synergies and roughly $500 million in profit from revenue synergies, within three to four years of the deal closing. It also expects to spend about $2.5 billion to realize these benefits in the first two years.
Source: Yahoo Finance Top News — This article was automatically imported from the source. Read full article at original source →
