Dividend King – Kimberly Clark

Kimberly-Clark is a multinational personal care corporation that manufactures and sells diapers, tissues, and other household and personal care items. Founded in 1872 by John A. Kimberly, Havilah Babcock, Charles B. Clark, and Franklyn C. Shattuck founded the company in Neenah, Wisconsin. The company was originally known as Kimberly Clark and Company; it manufactured paper products such as cigarette papers and banknotes. The company began to diversify into other products, such as tissues, napkins, and diapers, in the 1920s.

Kimberly-Clark is now a household name with a significant presence in the personal care and hygiene industry. The company employs over 40,000 people and operates in over 100 countries. Some of its most well-known brands include Huggies, Kleenex, and Scott. In addition to consumer products, the company also produces and sells products for the healthcare industry, including surgical gowns and face masks.

Business Model

Kimberly-Clark’s business operation mainly consists of three segments: Personal Care, Consumer Tissue, and K-C Professional.

Personal Care is Kimberly-Clark’s largest and most important business segments, accounting for approximately 53% of total sales in 2021. This segment includes diapers, feminine hygiene products, and adult incontinence products. It is known for its well-known brands, such as Huggies, Kotex, and Depend. This segment has a strong presence in many global markets and a long industry innovation and leadership history. The company has heavily invested in R&D to create high-quality products that meet the needs of its customers, and it has a strong supply chain that allows it to deliver these products to customers worldwide.

Kimberly Clark’s Consumer Tissue segment is the company’s second-largest overall business, accounting for 31% of total company sales. It has played an important role in the company’s success. Kimberly Clark has become synonymous with quality products that make a difference in people’s lives as the world’s leading manufacturer of personal care products and tissues. Paper towels, bathroom tissue, facial tissues, and napkins dominate the consumer tissue market. Consumers use these products daily, and they are designed to meet their needs for convenience and value.

Kimberly Clark’s K-C Professional segment represents 16% of its total sales. The segment includes products and services designed to meet customers’ needs in various industries, including health care, hospitality, industrial safety and janitorial/sanitation. K-C Professional is focused on providing quality products that help keep people safe and healthy while they work.  Products in this segment include cleaning chemicals, protective apparel, first aid supplies, waste management solutions, and dispensers for all types of consumables used in commercial businesses. Some of the brands in this segment include WypAll, Kimtech, and Jackson Safety.

Dividend Profile

Kimberly-Clark has a long history of paying dividends to its shareholders. The company has consistently increased its dividend payout over the years and has a strong track record of dividend growth.

Since 2012, Kimberly-Clark has increased its dividend by an average of 4.42% per year. The company has also increased its dividend every year since 1972 for 50 years straight. Currently, the company’s dividend yield was around 3.39%, which is higher than the average dividend yield for the S&P 500.

Notable Events

In 2018, Kimberly-Clark launched a global restructuring programme to streamline its operations and improve its financial performance. As part of this programme, the company announced the closure of 11 manufacturing facilities and the exit of some low-margin businesses. The restructuring programme was completed in 2021, and approximately 6,000 was reduced from the company’s workforce due to these changes. Kimberly-restructuring Clark’s programme was created to help the company focus on its core businesses and better align its operations with its long-term strategy. According to the company, the restructuring programme will enable it to become more agile and responsive to changing market conditions and better serve its customers.

Business Risk

Competition: The personal care and hygiene industry are highly competitive, with both large multinational corporations and smaller, local players competing. Kimberly-Clark has had to innovate and differentiate its products to remain competitive. To remain profitable in intense competition, the company has also had to focus on cost-cutting measures and efficiency improvements.

Consumer preference changes: The personal care and hygiene industry are subject to changes that the company must anticipate and adapt to remain competitive. For example, consumers’ preferences may shift toward more environmentally friendly products, necessitating the development of new products or changes to the company’s manufacturing processes. Kimberly-Clark has heavily invested in research and development and has a strong focus on innovation to stay ahead of changes in consumer preferences. In addition, the company closely monitors consumer trends and collaborates with its customers to understand their needs and preferences. Despite these efforts, there is still a risk that the company will fail to anticipate or adapt to changes in consumer preferences, resulting in lower sales and profitability.

Closing Thoughts

Kimberly Clark is one of the world’s leading consumer goods manufacturers. The company has proven to be a reliable investment thanks to its strong business model and long track record of consistently paying dividends. Kimberly Clark offers investors consistent returns on their investments with minimal risk due to its well-diversified portfolio across multiple segments, such as tissue and personal care products. Furthermore, its efficient cost structure allows it to remain competitive even in difficult economic times. As a result, Kimberly Clark is an excellent choice for investors looking for consistent dividend income from a low-risk stock.

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