Bookmark and Share

1/20/2013

Kimberly Clark (KMB): New Stock In My Dividend Yield Passive Income Portfolio


Kimberly Clark (KMB) was my latest choice when I thought about what kind of stock should be the next buy for my Dividend Yield Passive Income Portfolio DYPI. The portfolio has now 16 stocks and was funded virtual with $100,000 on October 03, 2012.

Since the date of funding, I put every Friday one great dividend growth stock into the portfolio. The total purchasing amount was $22,730.35 which gives me a total estimated dividend income of $734.93. Not enough, I like to increase the number of stocks to a total of 50-70 by the end of this year.

Stock acquisitions shouldn’t be a big problem. Sure stocks are not cheap but high quality stocks have a high price and you must pay it. Dividends included, I still have $78,926.55 of free cash to boost my dividend income to a total value of $3,000 - $4,000 per year.

I personally have an annulized five-figure dividend income and made most of my private wealth with dividend growth stocks. One of my trading accounts shows that I have increased my starting capital by the factor of 6.6 over the recent decade. Two-third of my income were capital gains and one-third dividend payments.

What I like to show with the DYPI-Portfolio is that you can make money with dividend stocks in every market situation. All you need is patience, a focus on high quality stocks with a broad diversification and a trustful management as well as a long-term investment horizon.

If you do so, you will make money by stock trading. I am not sure if I should use this word "trading" because it is more a strategy of buy and hold.

Why put I Kimberly-Clark into the DYPI-Portfolio?

First, the company doesn’t appear often on my screens. That show that the company has not yet attractive fundamentals in anyway. KMB is not cheap, the current P/E ratio is at 18.28 and forward P/E is at 15.56. Earnings per share are expected to grow by 6.69 for the next year and 9.37 percent for the upcoming five years.

Earnings and Dividends Of Kimberly-Clark
Past earnings per share growth were possible due to massive stock repurchase programms financed with debt. That’s one of the reasons why I don’t like the company so much as consumer stock. Sure, out there are so many companies with a lower quality but you must know that I talk on highest levels. What I mean is in relation to Coca Cola and Procter & Gamble. That’s the reason for underweighting the stock. The portfolio share of KMB in my DYPI-Portfolio is at 1.3 percent.

What makes Kimberly-Clark?

Kimberly-Clark engages in manufacturing and marketing health care products worldwide. The company operates in four segments: Personal Care, Consumer Tissue, K-C Professional and Other, and Health Care. The Personal Care segment manufactures and markets disposable diapers, training and youth pants, swimpants, baby wipes, feminine and incontinence care products, and related products under the various brand names, including Huggies, Pull-Ups, Little Swimmers, GoodNites, Kotex, Lightdays, Depend, and Poise.

Half of the revenues came from the Americans region, 15.42 percent from Europe, 1.81 percent from Australia and 26.79 percent from Asia.

I bought 15 stocks with a total value of $1,302.30. This buy will give me more stability to my DYPI-Portfolio because KMB is a stock with a very low beta ratio (Beta: 0.3).  

The whole portfolio is 0.82 percent up since the funding date. That is not much because the broad market, measured with the S&P500, increased during the same period 3.08 percent. The Dow Jones was up 1.3 percent.

However, the return is so low because I have still a huge amount of not invested capital. The invested capital gained 3.18 and beat the return of the S&P 500. I ever told that this strategy will underperform if the market goes sharply up. But this not what I like to show. I don't want to teach you how to make fast money and to get quick rich. I like to show you how to make money with solid dividend growth stocks over a long period. This could result in a yearly double-digit return, a performance that I have realized over the recent decade.

Lastest Transactions of the Portfolio (Click to enlarge)

Portfolio Overview (Click to enlarge)

What do you think about the Dividend Yield Passive Income Portfolio? Do you have some stocks? Let me know and share your thoughts in the comment box below.


Sym
Name
P/E Ratio
Dividend Yield

Buy
# Shrs
Income
Value
TRI
Thomson Reuters C
N/A
4.24

28.90
50
$64.00
$1,506.00
LMT
Lockheed Martin C
10.87
4.38

92.72
20
$83.00
$1,879.40
INTC
Intel Corporation
9.89
3.84

21.27
50
$43.50
$1,062.50
MCD
McDonald's Corpor
17.28
3.13

87.33
15
$43.05
$1,383.90
WU
Western Union Com
6.65
3.16

11.95
100
$42.50
$1,341.00
PM
Philip Morris Int
17.82
3.68

85.42
20
$65.58
$1,799.60
JNJ
Johnson & Johnson
23.88
3.29

69.19
20
$48.00
$1,464.60
MO
Altria Group Inc
17.19
5.15

33.48
40
$68.00
$1,330.80
SYY
Sysco Corporation
16.64
3.48

31.65
40
$43.60
$1,258.80
DRI
Darden Restaurant
12.97
4.25

46.66
30
$57.90
$1,361.40
CA
CA Inc.
12.29
4.13

21.86
50
$50.00
$1,228.50
PG
Procter & Gamble
19.41
3.23

68.72
25
$56.20
$1,748.50
KRFT
Kraft Foods Group
14.32
1.07

44.41
40
$20.00
$1,882.04
MAT
Mattel Inc.
15.67
3.28

36.45
40
$49.60
$1,521.20
PEP
Pepsico Inc. Com
19.29
2.94

70.88
20
$42.56
$1,449.60
KMB
Kimberly-Clark Co
18.21
3.43

86.82
15
$44.40
$1,302.30
















$734.93
$23,520.14
















Average Yield
3.12%
















Yield On Cost
3.23%
* Dividend income is calculated on dividend of the recent 4 quarters and provided by yahoo.finance.


4 comments:

  1. Anonymous1/20/2013

    On paper, Kimberly-Clark (KMB) sounds like a great investment. The company primarily manufactures consumer tissue and dominates many of its markets. Huggies, Kotex, and Cottonelle are all household names. Its Kleenex tissues are a category killer, meaning that they have been so embraced by consumers that nose-blowers will often simply ask for a 'Kleenex.'

    Additionally, it sells non-durable goods-- meaning that consumers need to buy them regularly, in good or bad times-- so the company should fare well in a recession. Having been featured in Jim Collin's book 'Good to Great'-- where it was profiled as one of the eleven greatest stocks of the 70s, 80s, and 90s by total returns-- the company has a lot to live up to. But I still haven't bought the stock. Out there are too many other companies with better ratios.

    ReplyDelete
  2. Anonymous1/20/2013

    I drip KMB,PG,K,HNZ,GIS,PFE,JNJ,AEP,LMT,UTX,UHT,CLX
    I consider all of these as part of my "CORE PORTFOLIO" and rarely check the per share price.

    ReplyDelete
  3. Anonymous1/20/2013

    I started following your dividend yields recently, and find them very interesting. Clearly you are following rule one (first do no harm) of maintaining your values. Not a bad thing.

    Personally, before finding your articles, have been seeking dividend paying stocks with a slightly different view: I am seeking more increase in value, and hedging my bets with the dividend. IE, Fastinal, FAST.

    Also, GE, RE, to mention a few. This has over the short term (3 years) worked rather well. I have also used a few monthly dividend payers such as 2 or three you mentioned in you article, one in particular is KKR. Can't use MLP's much, as I am using my IRA and ROTH for most of this, but sure would love to do so. Yes, the monthly dividend plays are actually more in your area, but I look for the ones I bought to grow faster than the market.

    My stated goal (yes, I wrote them down when I started) is to grow, increase dividends over time by at least 5% annually, and aim at value increases annually by at least 8 %. For the last 3 years, this has been relatively easy, with the combination being just under 20%. And with the volotility, have tried to maintain about 10% in cash for when I find bargains.

    Have you enough history with your selections to comment about volatility over at least several years? I recognize the portfolio you are assembling can't do this because of its recent origin, but wonder if you have personal prior history that helped you to reach your present theories.

    Since I think others would have similar thoughts and questions, you might comment (if at all) in your articles.

    ReplyDelete
  4. Hi,
    Thank you so much for reading and sharing your thoughts.

    I know that you are mistrusting me. But let me know one thing. I don't want you to sell any services or stocks. I do this research for my own asset allocation and I like to share my thoughts about what I am doing. Just follow my portfolio and we will see if I am right or not.

    ReplyDelete

Do you have any questions or notes to this article?
Please let me know your thoughts and we will discuss it.

Free Dividend Yield Newsletter

Free Dividend Yield Newsletter

If you like to receive our Newsletter, please enter your email and verify your adress. Easily unsubscribe at any time, no spam, just content.