Kimberly Clark: New Stock In My Dividend Yield Passive Income Portfolio

Kimberly Clark (KMB) was my latest choice when I thought about what kind of stock should be the next buy for my Dividend Yield Passive Income Portfolio. The portfolio now has 16 stocks and was funded virtually with $100,000 on October 03, 2012.

Since the date of funding, every Friday I put one great dividend growth stock into the portfolio. The total purchase amount so far has been $22,730.35 which gives me a total estimated dividend income of $734.93. I'd like to increase the number of stocks to a total of 50-70 by the end of this year. I still have $78,926.55 of free cash to boost my dividend income to a total value of $3,000 - $4,000 per year.

I have an annulized five-figure dividend income and made most of my private wealth with dividend growth stocks. One of my trading accounts shows that I have increased my starting capital by a factor of 6.6 over the recent decade. Two-thirds of my income was from capital gains and one-third from dividend payments.

What I like to show with the DYPI-Portfolio is that you can make money with dividend stocks in every market situation. All you need is patience, a focus on high quality stocks with broad diversification and trustworthy management as well as a long-term investment horizon.

Why Kimberly-Clark in the DYPI-Portfolio?

First, the company doesn’t appear often on my screens. That shows that the company does not yet have attractive fundamentals . KMB is not cheap. The current P/E ratio is at 18.28 and forward P/E is at 15.56. Earnings per share are expected to grow by 6.69 for the next year and 9.37 percent for the upcoming five years.


Past earnings per share growth were possible due to massive stock repurchase programs financed with debt. That’s one of the reasons why I don’t like the company so much as a consumer stock. Sure, there are many companies that are of lower quality, particularly in relation to Coca Cola (KO) and Proctor & Gamble (PG). That’s the reason for underweighting the stock. The portfolio share of KMB in my DYPI-Portfolio is at 1.3 percent.

What does Kimberly-Clark make?

Kimberly-Clark engages in manufacturing and marketing health care products worldwide. The company operates in four segments: Personal Care, Consumer Tissue, K-C Professional and Other, and Health Care. The Personal Care segment manufactures and markets disposable diapers, training and youth pants, swimpants, baby wipes, feminine and incontinence care products, and related products under the various brand names, including Huggies, Pull-Ups, Little Swimmers, GoodNites, Kotex, Lightdays, Depend, and Poise.

Half of the revenues came from the Americas region, 15.42 percent from Europe, 1.81 percent from Australia and 26.79 percent from Asia.

I bought 15 shares with a total value of $1,302.30. This buy will give me more stability to my DYPI-Portfolio because KMB is a stock with a very low beta ratio (Beta: 0.3).

The whole portfolio is up 0.82 percent since the funding date. That is not much because the broad market, measured against the S&P 500, increased during the same period by 3.08 percent. The Dow Jones was up 1.3 percent.

However, the return is so low because I still have a huge amount of not invested capital. The invested capital gained 3.18 and beat the return of the S&P 500. I ever told that this strategy will underperform if the market goes sharply up. But this not what I like to show. I don't want to teach you how to make fast money and to get quick rich. I like to show you how to make money with solid dividend growth stocks over a long period. This could result in a yearly double-digit return, a performance that I have realized over the recent decade.




What do you think about the Dividend Yield Passive Income Portfolio? Do you have some stocks? Let me know and share your thoughts in the comment box below.


* Dividend income is calculated on dividend of the recent 4 quarters and provided by yahoo.finance.