An Overlooked Dividend King With a 54-Year Winning Streak Worth Buying Now

A Dividend King is simply a institution that has accrued its dividend for astatine slightest 50 years successful a row. There are presently lone 57 that tin deterioration this crown.

One of them is Kimberly-Clark (NASDAQ: KMB), the venerable institution that makes tissues, insubstantial towels, diapers, and different paper-based family-care products. It has accrued its dividend for 54 consecutive years, making its banal a Dividend King. But it besides pays retired 1 of the highest yields among Dividend Kings -- 4.7% close now. The operation makes it 1 of the best, astir reliable dividend stocks you tin buy.

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But the banal is not conscionable a bargain for its royal dividend -- it's besides positioned to present immoderate coagulated returns. Here's why.

A strategical displacement toward higher-margin products

Kimberly-Clark banal is up astir 11% twelvemonth to day (with dividends reinvested), but its full returns are down astir 10% implicit the past 12 months. Its semipermanent returns aren't large either, arsenic it averaged a drop of 1% implicit the past 5 years and a full emergence of lone 1% implicit the past decade.

Its main inferior for investors has been to supply fantabulous dividend income, and immoderate downside extortion erstwhile markets spell south. But immoderate caller developments could presumption the institution to make immoderate decent returns.

Earlier this month, Kimberly-Clark struck a woody with pulp supplier Suzano (NYSE: SUZ) to signifier a caller insubstantial products company, Arbex. This benefits Kimberly-Clark by offloading its lower-margin paper-towel and insubstantial business, allowing it to absorption connected its higher-margin personal-care products. Kimberly-Clark besides has a licensing statement with Arbex to licence its insubstantial brands, truthful that volition make immoderate licensing royalties.

A greater absorption connected absorbing its Kenvue acquisition

More importantly, it frees up resources for Kimberly-Clark to integrate its pending acquisition of Kenvue (NYSE: KVUE).

Kenvue, which makes skincare products similar Aveeno and user wellness products similar Band-Aid, Tylenol, and Listerine (to sanction conscionable a few), spun disconnected from Johnson & Johnson successful 2023. Kimberly-Clark sees it arsenic a complementary fit, creating a planetary wellness and wellness leader, and expects the operation to maximize each company's strengths and accelerate growth.

Kimberly-Clark anticipates astir $1.9 cardinal successful outgo synergies and astir $500 cardinal successful nett from gross synergies, wrong 3 to 4 years of the woody closing. It besides expects to walk astir $2.5 cardinal to recognize these benefits successful the archetypal 2 years.