New Buy: Kimberley-Clark (KMB)

Consumer Staples is a sector where I am under invested in. That is, according to my own ‘ideal’ portfolio composition.

For a dividend growth investor it’s pretty straightforward to want to include Consumer Staples stocks in your portfolio – whether the economy is going up or down, people will always have a need for food, personal care, cleaning products and the like.

In fact, according to this graph Consumer Staples stocks outperform the market during recessions. Low-risk, boring and predictable dividend growth, just the way I like it!

I have found most Consumer Staples stock to be on the expensive side lately, with P/E ratios higher than their 5 year average. Case in point: Unilever and Diageo – two of my favorite stocks in the sector but at the moment just too expensive to add more to my portfolio.

However, one other Consumer Staples stalwart recently moved into attractive buying territory.

On August 31 I bought 16 shares of Kimberley-Clark (KMB) for a total of $1,953.

In this post I explain the reasons why I made these additions to my portfolio and what this means for my forward dividend income. 

Kimberly-Clark Corporation, together with its subsidiaries, manufactures and markets personal care, consumer tissue, and professional products worldwide.

The Personal Care segment offers disposable diapers, training and youth pants, swimpants, baby wipes, feminine and incontinence care products, and other related products under the Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Kotex, U by Kotex, Intimus, Depend, Plenitud, Poise, and other brands.

The Consumer Tissue segment provides facial and bathroom tissues, paper towels, napkins, and related products under the Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, Neve, and other brand names.

The K-C Professional segment offers wipers, tissues, towels, apparel, soaps, and sanitizers under the Kleenex, Scott, WypAll, Kimtech, and Jackson Safety brands.

The company was founded in 1872 and is headquartered in Dallas, Texas.

KMB’s current dividend yield is 3.17% – slightly below the average 3.5% yield I strive for in building my portfolio.

The company is featured on David Fish’s list of Dividends Champions, Contenders and Challengers – boasting a 45 (!) year streak of growing dividend pay-outs.

The 5 year dividend growth is an OK 5.56% – with last year’s dividend growth coming in at 5.43%.

KMB‘s Earnings per Share (EPS) over the last five years shows an 8.47%  increase. Projected EPS growth for next year as compared to the current year is 6.44%.

The trailing 12 months Price/Earnings (P/E) is 20.45, which is well below it’s 5 year average of 28.15. It is also significantly lower than the industry’s 5 year average of 25.77.

EVA Dimensions (an equity research firm) states in their  August 31 report that KMB‘s Performance Risk Valuation score is at the 80th percentile of all firms in its industry, which leads to a recommendation to Buy.

It adds that Kimberley-Clark is more attractively priced in relation to its true value than all but a few of the stocks in its industry.

Given KMB’s annual dividend of $3.88 per share this purchase increased my forward annual dividend income by $62.

What do you think about Kimberley-Clark? Are you buying other dividend growth stocks? Leave a comment/reply to share your thoughts!

New Buy: Simon Property Group (SPG)

CEO Steve Tanger – of the eponymous outlet company – famously said, “In good times, people love a bargain, in bad times folks need a bargain.

While the dominant narrative seems to be that malls in the US are going the way of the dodo, outlet and discount malls seem to be doing just fine.

On August 14 I bought 10 shares of Simon Property Group (SPG) for a total of $1,585.80.

With the stock in steady decline for the past year (see picture below), I believe it has entered bargain territory.

In this post I explain the reasons why I made these additions to my portfolio and what this means for my forward dividend income. 

Simon Property Group is an equity real estate investment trust. The firm invests in the real estate markets across the globe. It engages in investment, ownership, management, and development of properties.

It primarily invests in regional malls, premium outlets, mills, and community/lifestyle centers to create its portfolio.

Simon Property Group, Inc. was founded in 1960 and is based in Indianapolis, Indiana, with additional office in New York, New York.

SPG’s current dividend yield is 4.70% – higher than the average 3.5% yield I strive for in building my portfolio.

The company is featured on David Fish’s list of Dividends Champions, Contenders and Challengers – boasting an 8 year streak of growing dividend pay-outs.

The 5 year dividend growth is an impressive 11.38% – with last year’s dividend growth coming in at 9%.

SPG‘s Earnings per Share (EPS) over the last five years shows an 11.02% increase. Projected EPS growth for next year as compared to the current year is 11.15%.

The trailing 12 months Price/Earnings (P/E) is 27.22, which is well below the 5 year average of 32.42. It is also significantly lower than the industry’s 5 year average of 67.13.

In their August 22 report CFRA marks SPG as a 3 star hold with a 12 month target price of $170 – about 9% above my buying price.

EVA Dimensions (another equity research firm) states in their  August 23 report that SPG’s Performance Risk Valuation score is at the 80th percentile of all firms in its industry, which leads to a recommendation to Buy.

It adds that SPG is more attractively priced in relation to its true value than all but a few of the stocks in its industry.

Given SPG’s annual dividend of $7.20 per share this purchase increased my forward annual dividend income by $72.

What do you think about Simon Property Group? Are you buying other dividend growth stocks? Leave a comment/reply to share your thoughts!