Skip to main content

3 Reasons Kimberly-Clark Should Hold An Essential Place In Your Portfolio Regardless of Earnings

Thursday, April 22, 2021 | Chris Markoch
3 Reasons Kimberly-Clark Should Hold An Essential Place In Your Portfolio Regardless of Earnings

Because Kimberly- Clark (NYSE:KMB) was a pandemic winner, its 2021 earnings will have to be viewed through that lens. What I mean is that the company is expected to post earnings that will be a slight decline from the same quarter in 2020.

Specifically, analysts are forecasting earnings per share (EPS) of $1.92 on revenue of $4.94 billion. That compares to an EPS of $2.13 and revenue of $5 billion in the first quarter of 2020.

Normally a year-over-year decline is reason for investors to be concerned. And looking at things completely objectively, the nation was well into the first quarter of 2020 before the store shelves got depleted.

However, it still is worth noting that the company’s 2021 results will be compared to a year in which earnings per share jumped by 14%.  

And if you compare the analysts forecast to the company’s prior quarter, Kimberly Clark beats on the top and bottom lines. If you want to pull back to the first quarter of 2019 the company also delivers a comfortable beat for both revenue and earnings.

First the bad news

Of course, data will show you anything if you look at it hard enough. A salient fact for investors is that KMB stock is down 18% in the last eight months. And there’s a reason for that. The company has faced increasing manufacturing costs, and continues to suggest it will have higher commodity-related costs throughout 2021.

But here again, it’s worth mentioning while the company did endure a pullback in earnings in the last two quarters of the year, it still saw an EPS gain of over 14% in 2020.

In my opinion, there are three reasons that make this an excellent time for investors to buy into the stock.

Old Habits Will Stay in Place

Analysts are expecting consumers to continue the deep cleaning rituals they undertook during the pandemic. In late 2020, a survey by the research firm Mintel, cited that “26% of U.S. consumers who use household surface cleaners say they will go back to their typical cleaning routine when the pandemic is over or controlled.”

One reason for this is that many consumers will still be receiving notifications from their surroundings of the importance of proper hygiene. As office building, bars, restaurants, and other public venues open, there will likely be more signs reminding patrons to wash and sanitize their hands. Some businesses may continue to require face coverings.  

This is a catalyst for Kimberly-Clark because it sells items like facial tissues, soaps, and sanitizers. And now the company will likely start seeing demand on the commercial side which has largely been absent during the pandemic.

Medical Spending Will Resume

Kimberly-Clark sells personal protective equipment (PPE) through its Professional division. This includes products for cleanroom environments, lab environments, and sterilization wraps. The demand for these products is likely to remain strong.

This is because in the early stages of the pandemic, the amount of elective surgical procedures plummeted. And in many states, hospitals and medical centers are still working through a backlog of surgeries.  

The Dividend Remains Solid

I’ve given you two reasons why you might capture a little stock price growth with KMB stock. But this has always been a dividend stock. And it continues to be a strong stock for income-minded investors. In January 2021, the company increased its dividend by 7 cents. That makes it 10 straight years of increasing its dividend payout which now sits at $4.56 annually.

Kimberly-Clark also has three-year dividend growth of 10.42%. And the dividend is well-covered as it is only 44% of cash flow.

The Bottom Line on KMB Stock

Analysts widely view Kimberly-Clark as being fully valued at its current price. However the company finds itself in a sweet spot where demand on the commercial and professional side should kick in even if consumer demand declines. That should help mitigate some of the added costs. Plus, you’re investing in a company that provides a strong, reliable dividend.

Featured Article: What are Closed-End Mutual Funds?


7 Stocks That Could Benefit From a Capital Gains Tax Hike

One thing every investor needs to learn is the effect of capital gains on their investments. Every time an investor sells a stock that has appreciated in value, that capital gain is subject to being taxed. Stocks that are held for less than a year pay a short-term capital gains tax rate. Stocks that are held for over a year pay a long-term capital gains tax rate.

In general, a capital gains tax hike is a bearish indicator for stocks. However, there are a couple of strategies that can help investors avoid some of the tax hit. One strategy is to keep your investments in an individual retirement account (IRA) or 401(k). However many higher-income earners want to have more access to the funds in their brokerage accounts.

A sound strategy for these investors involves buying dividend stocks. Dividend income is also taxed (unless it is reinvested), but typically when the capital gains tax rate is raised, the dividend income rate stays the same. This makes dividend stocks more attractive.

Investing in dividend stocks is never a bad idea, but at times when the capital gains tax rate is favorable, growth stocks provide a better reward for investor capital. But when long-term capital gains tax rates go up, those gains can get expensive.

In this special presentation, we’ll give you seven stocks that have a nice dividend yield and a strong story to go along with them.

View the "7 Stocks That Could Benefit From a Capital Gains Tax Hike".


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Kimberly-Clark (KMB)2.3$134.18+0.3%3.40%19.50Hold$142.75
Compare These Stocks  Add These Stocks to My Watchlist 

MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau

© American Consumer News, LLC dba MarketBeat® 2010-2021. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information

© 2021 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research. As a bonus to opt-ing into our email newsletters, you will also get a free subscription to the Liberty Through Wealth e-newsletter. You can opt out at any time.