Recent Buy, May 2018

Pollen Gremlin here to chat about a new buy.  Its spring and that means pollen is in the air, so allergy meds are in my system.  Its the biggest downside of nice weather, and the main reason spring ranks as my least favorite season.  In between sneezes its been a busy time here.  I also just completed another short bit of work travel and there is a laundry list of things that need to get done at home.  It will be nice in the future when baby Gremlin finally can help out with some of those - especially the sneeze inducing ones.  In particular his job list will include dusting, as it is the singular chore I despise above all others.  Anyways, what did I buy?

A few days ago, I added a new position by purchasing shares of Kimberly-Clark Corp (KMB) in my IRA account.  I bought 10 shares, with a total cost of $1,039.57 ($103.26 / share, plus commission).  The current yield is 3.83%.  The P/E ratio for KMB sits today at approximately 16.19, trailing.  The yield is slightly above the 5 year average of 3.4%, and P/E is well below its average of the past 5 years (28.35).  KMB has a trailing payout ratio of approximately 58% (it seems be reported between 55 and 65%, with some stating 77% - likely a skew from taxes at the end of 2017).  KMB is a dividend champion, having paid increasing dividends now for 46 years.  Its long term average dividend raise is around 7%, however recent increases tend to be between 4 and 6% - with the most recent being just above 3%.

What does KMB do in their own words:

Kimberly-Clark is a leading manufacturer of personal care (around half of sales) and tissue products (roughly one third of sales). Its portfolio of brands includes Huggies, Pull-Ups, Kotex, Depends, Kleenex, and Cottonelle, among others. The firm also operates K-C Professional, which partners with businesses to provide safety and sanitary products for the workplace. Kimberly-Clark generates slightly north of half its sales in North America and more than 10% in Europe, with the rest primarily concentrated in Asia and Latin America.

KMB is a $36B company, which produces a bunch of consumer staples.  Consumer staple stocks have been beat up of late, they are not new or cool.  There is no fast or flashy money to be made.  That being said, KMB is surely feeling the squeeze other old consumer stocks are - new organic / hypoallergenic (among other things) products, lower price points of generic breads, and less millennial brand recognition.  At least that is the drum that is beaten today about these types of companies - neglecting their general role in those things (lots of store brands are tied to branded items - either in manufacturing or materials) and their general ability to buy up newer / smaller competition.  Companies like KMB are starting to get hard to ignore at these levels.

This purchase will add $40 to my forward 12 month dividend income.

I will update my portfolio page at the end of the month.

What do you think of KMB? 

- Gremlin
- Long KMB