New Buys: Kimberley-Clark (KMB) and Cardinal Health (CAH)

With both the Dow and the S&P 500 refusing to stop setting records, it’s nice to find some great dividend growth stocks on sale every now and then.

Two existing positions in my portfolio continued to show price weakness – giving me a great opportunity to add more and lower my cost basis in the process.

On September 9 I added 9 more shares of Kimberley-Clark (KMB) for a total of $1,073.

And on September 11 I bought 15 additional shares of Cardinal Health (CAHfor a total of $1,0475.

I refer back to my recent post on Kimberley-Clark for a more detailed analysis on this dividend growth stock.

In this post I will cover Cardinal Health, why like the stock enough to add more and what both purchases mean for my forward dividend income.

Cardinal Health, Inc. operates as an integrated healthcare services and products company worldwide.

The company’s Pharmaceutical segment distributes branded and generic pharmaceutical, specialty pharmaceutical, over-the-counter healthcare, and consumer products to retailers, hospitals, and other healthcare providers.

The company’s Medical segment manufactures and sources medical, surgical, and laboratory products, including cardiovascular and endovascular products; wound care products; surgical drapes, gowns, and apparel; exam and surgical gloves; fluid suction and collection systems; and incontinence, enteral feeding, urology, operating room supply, electrode and needle, and syringe and sharps disposal product lines.

It also distributes medical, surgical, and laboratory products to hospitals, ambulatory surgery centers, clinical laboratories, and other healthcare providers, as well as to patients in the home; and assembles and sells sterile and non-sterile procedure kits.

The company was founded in 1979 and is headquartered in Dublin, Ohio.

By the way: the location of it’s HQ should not be confused – as I initially did – by Dublin, Ireland where so many US companies have ‘moved’ to.

Cardinal’s current dividend yield is 2.74% –  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 21 year streak of growing dividend pay-outs.

The 5 year dividend growth is a decent 14.25% – with last year’s dividend growth coming in at 3.01%.

CAH’s Earnings per Share (EPS) over the last five years shows an 5.66%  increase. Projected EPS growth for next year as compared to the current year is 11.90%.

The trailing 12 months Price/Earnings (P/E) is 16.71, which is well below it’s 5 year average of 26.92. It is also significantly lower than the industry’s 5 year average of 23.57.

EVA Dimensions (an equity research firm) states in their September 15 report that CAH‘s Performance Risk Valuation score is at the 67th 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 well over half of the stocks in its industry.

Ford Equity Research recommends a ‘hold‘ with a 12 month range of 52-week price range of $64.36 – $83.80.

Jefferson Research concludes that Cardinal is showing strong Earnings Quality, Cash Flow Quality, Operating Efficiency and Balance Sheet Quality, and Valuation suggests a lower amount of price risk. When combined, CAH deserves a ‘buy’ rating.

Given Cardinal’s annual dividend of $1.85 per share this purchase increased my forward annual dividend income by $28. 

The additional 9 shares of Kimberley-Clark added $35 to my forward dividend cash flow.

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

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!