KMB Kimberly Clark Corp

Kimberly-Clark Corporation (KMB), with its quarterly dividend hike to 74 cents per share from 70 cents per share, boasts of a record of dividend increase for 40 years consecutively.

The company hiked its dividend by 6% and the increased dividend is payable on April 3, 2012 to shareholders of record on March 9, 2012.

The move comes a month after the company posted outstanding fourth quarter and fiscal 2011 earnings of $1.28 and $4.80 per share, which were 7.0% and 2.6% higher than the year-ago earnings. The growth was mainly attributable to sales growth, cost savings and a lower share count. However, these were partially offset by rising input cost inflation, higher effective tax rate and lower net income from equity companies.

Though the company did not repurchase any common stock in the fourth quarter of 2011, Kimberly-Clark‘s total buybacks in fiscal 2011 totaled 19.0 million shares at a cost of $1.24 billion. In addition, share repurchases are expected to total $900 million to $1.1 billion in fiscal 2012, subject to market conditions.

Kimberly-Clark was anticipating this dividend increase although cash provided by operations in the fourth quarter of 2011 amounted to $517 million as compared to $948 million in the prior-year quarter. The decline was driven by increased working capital compared to a significant decrease in the year-ago period, along with higher defined benefit pension plan contributions, partially offset by improved cash earnings.

Cash provided by operations in fiscal 2011 was also lower than 2010 at $2.29 billion, driven by higher pension contributions in 2011.

Capital spending in the fourth quarter of 2011 was $312 million as compared to $353 million in 2010, whereas it amounted to $968 million in fiscal 2011. However, the capital spending in fiscal 2012 is expected to be in line with the company's long-term target of 4.5% to 5.5% of net sales, in the range of $1.0 to $1.1 billion.

Recently, The Coca Cola Company (KO) also hiked its quarterly dividend by 8.5% to 51 cents per share from 47 cents per share.  The dividend is payable on April 1, 2012 to shareholders of record on March 15, 2012.

Kimberly-Clark, which competes with Procter & Gamble Co. (PG), currently holds a Zacks #3 Rank, which translates into a short-term Hold rating. On a long-term basis, we maintain a Neutral rating on the stock.

 
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