Here's What We Like About Kimberly-Clark de México S. A. B. de C. V's (BMV:KIMBERA) Upcoming Dividend

Kimberly-Clark de México, S. A. B. de C. V. (BMV:KIMBERA) stock is about to trade ex-dividend in 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Kimberly-Clark de México S. A. B. de C. V's shares before the 2nd of April to receive the dividend, which will be paid on the 4th of April.

The company's next dividend payment will be Mex$0.465 per share, and in the last 12 months, the company paid a total of Mex$1.62 per share. Calculating the last year's worth of payments shows that Kimberly-Clark de México S. A. B. de C. V has a trailing yield of 4.2% on the current share price of Mex$38.60. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Kimberly-Clark de México S. A. B. de C. V has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Kimberly-Clark de México S. A. B. de C. V

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Its dividend payout ratio is 77% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. We'd be worried about the risk of a drop in earnings. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Thankfully its dividend payments took up just 45% of the free cash flow it generated, which is a comfortable payout ratio.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Kimberly-Clark de México S. A. B. de C. V's earnings per share have risen 11% per annum over the last five years. It paid out more than three-quarters of its earnings in the last year, even though earnings per share are growing rapidly. We're surprised that management has not elected to reinvest more in the business to accelerate growth further.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Kimberly-Clark de México S. A. B. de C. V has lifted its dividend by approximately 2.1% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

The Bottom Line

Has Kimberly-Clark de México S. A. B. de C. V got what it takes to maintain its dividend payments? Kimberly-Clark de México S. A. B. de C. V's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. Kimberly-Clark de México S. A. B. de C. V looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

While it's tempting to invest in Kimberly-Clark de México S. A. B. de C. V for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 2 warning signs for Kimberly-Clark de México S. A. B. de C. V you should know about.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.