Kimberly-Clark Corporation (KMB) has regularly returned value to its shareholders and has increased its dividend every year over the last 42 years.
Recently, the board of directors of this leading consumer products giant authorized a new share repurchase program for up to 40 million shares for $5 billion. The authorization has thus expanded the company’s current 50 million share authorization, which is expected to be completed in the first quarter of 2015.
In addition, Kimberly-Clark declared a regular quarterly dividend of 84 cents per share, which will be paid on Jan 5, 2015, to shareholders as of Dec 5, 2014.
The company is cash rich and has a consistent track record of returning cash to shareholders in the form of dividend payments and share buybacks. This indicates the underlying strength of the business and management’s inclination to return value to shareholders. The company returned $2.4 billion to its shareholders in 2013 through share repurchases and dividends.
For 2014, Kimberly-Clark expects to repurchase shares worth $1.3 billion to $1.5 billion. Regarding dividends, the company targets a dividend hike of 2% to 4% in 2014 that will allow it to maintain an appropriate payout ratio.
Share buybacks have also contributed to earnings growth since several quarters. Last month, Kimberly-Clark’s third quarter 2014 earnings of $1.61 per share exceeded the Zacks Consensus Estimate of $1.54 by 4.5% and grew 11.8% from the year-ago figure of $1.44 per share. Earnings were boosted by organic sales growth, cost savings and lower share count owing to share buybacks, which made up for increased input costs, currency headwinds, higher tax rate and lower net income from equity companies.
Currently, Kimberly-Clark has a Zacks Rank #3 (Hold).
Some better-ranked consumer staple companies are Post Holdings, Inc. (POST), Aramark Holdings (ARMK) and WD 40 Co (WDFC). While Post Holdings and Aramark Holdings sport a Zacks Rank #1 (Strong Buy), WD 40 holds a Zacks Rank #2 (Buy).
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