Four Days Left To Buy Kimberly-Clark de México, S. A. B. de C. V. (BMV:KIMBERA) Before The Ex-Dividend Date

Readers hoping to buy Kimberly-Clark de México, S. A. B. de C. V. (BMV:KIMBERA) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. In other words, investors can purchase Kimberly-Clark de México S. A. B. de C. V's shares before the 3rd of December in order to be eligible for the dividend, which will be paid on the 4th of December.

The company's upcoming dividend is Mex$0.51 a share, following on from the last 12 months, when the company distributed a total of Mex$1.86 per share to shareholders. Last year's total dividend payments show that Kimberly-Clark de México S. A. B. de C. V has a trailing yield of 5.0% on the current share price of Mex$36.88. If you buy this business for its dividend, you should have an idea of whether Kimberly-Clark de México S. A. B. de C. V's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Kimberly-Clark de México S. A. B. de C. V is paying out an acceptable 72% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Kimberly-Clark de México S. A. B. de C. V generated enough free cash flow to afford its dividend. Over the last year, it paid out more than three-quarters (76%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

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.

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

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. This is why it's a relief to see Kimberly-Clark de México S. A. B. de C. V earnings per share are up 7.4% per annum over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. 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 9.7% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

Is Kimberly-Clark de México S. A. B. de C. V worth buying for its dividend? Earnings per share have been growing modestly and Kimberly-Clark de México S. A. B. de C. V paid out a bit over half of its earnings and free cash flow last year. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

However if you're still interested in Kimberly-Clark de México S. A. B. de C. V as a potential investment, you should definitely consider some of the risks involved with Kimberly-Clark de México S. A. B. de C. V. In terms of investment risks, we've identified 1 warning sign with Kimberly-Clark de México S. A. B. de C. V and understanding them should be part of your investment process.

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.