What Kimberly-Clark actually does

Kimberly-Clark is a personal-care and paper-products company founded in 1872 in Neenah, Wisconsin. It is now headquartered in Irving, Texas. Its brands include Kleenex, Huggies, Kotex, Cottonelle, Scott and Depend.

Many of its products are paper-based, so costs depend on wood pulp and other materials.

How the business makes money

Kimberly-Clark sells essential, repeat-purchase products such as tissue, diapers and feminine care, through retailers around the world. Its brands let it hold prices, but retailers and store brands push back hard.

Margins depend on input costs such as pulp and energy, which can swing sharply. The company also has international exposure, mostly in developing markets.

The dividend story

Kimberly-Clark has raised its dividend for more than five decades, making it a Dividend King. It pays quarterly. The yield is typically above the market average, which comes from its stable but slow-growing cash flow.

With a high yield and slow growth, the payout ratio and the level of debt are worth checking regularly.

What to keep an eye on

  • Input costs. Pulp, oil-based materials and energy can compress margins.
  • Private labels. Competition from store brands is strong.
  • Currencies. International sales are sensitive to exchange rates.
  • Strategic changes. Large deals or restructurings can change the company’s profile.

Quick take

Kimberly-Clark is a defensive staples company with a very long dividend record and a generous yield, balanced by low growth and commodity exposure.