Kimberly Clark Corp, Colgate-Palmolive Company, General Mills, Inc.: Consumer Staples Giants Hike Their Dividends

March 17, 2016 12:06pm ETF BASIC NEWS

investBob Ciura:  Many of the stocks with the longest histories of paying and raising their dividends over many years come from the consumer staples sector. Because of their popular products, high degree of earnings predictability and dividend growth, consumer staples are very popular among income investors.


consumer-staples-giants

The following three consumer staples stocks hold very long track records of consistent dividend payments without interruption. Even better, all three recently raised their dividends once again.

1. Kimberly-Clark Corp. (NYSE: KMB)

Kimberly-Clark stock has returned 23% over the past year, not including dividends, which was far better performance than the S&P 500 index during the same period. Its success is due to its strong brand portfolio, which includes Kleenex tissues, Huggies diapers, Cottonelle toilet paper and Viva paper towels. This is why Kimberly-Clark’s organic sales, which exclude the effect of foreign exchange, rose 5% last year.

Kimberly-Clark recently raised its dividend by 4%. Its new annualized dividend of $3.68 per share represents a 2.7% dividend yield. Kimberly-Clark has a long track record of paying its dividend, and also raising the distribution over time. With this increase, the company has now raised its dividend for 44 years in a row. Furthermore, it has paid a dividend for 82 years straight.

2. Colgate-Palmolive Co. (NYSE: CL)

On March 10, Colgate-Palmolive increased its quarterly dividend to $0.39 per share from $0.38 per share. The company has increased its dividend for 53 years in a row. On an annualized basis, the new dividend rate is $1.56 versus $1.52 per share previously. Its new dividend yields 2.28%.

Colgate-Palmolive has paid uninterrupted dividends on its common stock since 1895, an incredible streak that justifiably places the company in the good graces of income investors.

Its tremendous dividend record is the result of its growth over many years, thanks to its diversified portfolio including Colgate toothpaste, soap brands like Palmolive and Irish Spring, and an animal health business under the Hill’s Science Diet brand.

Colgate-Palmolive’s returns speak for itself. According to the company, the stock delivered a 1,021% total return over the 20-year period from Dec. 31, 1995, through Dec. 31, 2015. This handily beat the 383% total return for the S&P 500 during the same period.

3. General Mills Inc. (NYSE: GIS)

Last but not least, General Mills announced a 4% dividend raise. This increase represents the seventh dividend raise since 2010. Like Colgate-Palmolive, General Mills is a member of the century club: it has paid uninterrupted dividends for 117 years. In addition, according to the company, General Mills has delivered a 13% compound annual growth rate in total shareholder return over the past 50 years.

General Mills has seen its earnings growth stall in recent years, as the company has fallen behind the organics trend sweeping the nation. Sales of its canned and other shelf-stable items – including Green Giant canned fruits and vegetables and Progresso soup – are struggling. In response, General Mills bought Annie’s Homegrown for $820 million to supplement its existing organic brands. The problem is that its core brands still represent the majority of sales, which is why its net sales declined 4% over the first half of fiscal 2016.

Fortunately, General Mills still generates enough profits to reward shareholders with dividend raises. The company earned an adjusted $2.86 per share in fiscal 2015, which is still well above its dividend payout.

Boring Is Beautiful

The key takeaway for investors is that in the pursuit of income, one can hardly do better than the consumer staples sector. Kimberly-Clark, Colgate-Palmolive and General Mills have large product portfolios with popular brands that can be found in nearly every household across America.

Their defensive nature and stable earnings power allows them to pay – and even raise – their dividends with regularity. These are the kinds of slow-and-steady stocks that make their shareholders rich over many years of reliable dividends.

This article is brought to you courtesy of Bob Ciura from Wyatt Research.


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