Income Investors Should Know That Kimberly-Clark de México, S. A. B. de C. V. (BMV:KIMBERA) Goes Ex-Dividend Soon

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. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. In other words, investors can purchase Kimberly-Clark de México S. A. B. de C. V's shares before the 2nd of October in order to be eligible for the dividend, which will be paid on the 3rd of October.

The company's next dividend payment will be Mex$0.465 per share, on the back of last year when the company paid a total of Mex$1.86 to shareholders. Looking at the last 12 months of distributions, Kimberly-Clark de México S. A. B. de C. V has a trailing yield of approximately 5.9% on its current stock price of Mex$31.74. 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. 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 typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Kimberly-Clark de México S. A. B. de C. V paid out more than half (73%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the last year it paid out 54% of its free cash flow as dividends, within the usual range for most companies.

It's positive to see that Kimberly-Clark de México S. A. B. de C. V's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see Kimberly-Clark de México S. A. B. de C. V's earnings per share have risen 13% per annum over the last five years. Kimberly-Clark de México S. A. B. de C. V has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Kimberly-Clark de México S. A. B. de C. V has delivered an average of 2.9% per year annual increase in its dividend, based on the past 10 years of dividend payments. Earnings per share have been growing much quicker than dividends, potentially because Kimberly-Clark de México S. A. B. de C. V is keeping back more of its profits to grow the business.

The Bottom Line

Should investors buy Kimberly-Clark de México S. A. B. de C. V for the upcoming dividend? Higher earnings per share generally lead to higher dividends from dividend-paying stocks over the long run. That's why we're glad to see Kimberly-Clark de México S. A. B. de C. V's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 73% and 54% respectively. In summary, while it has some positive characteristics, we're not inclined to race out and buy Kimberly-Clark de México S. A. B. de C. V today.

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. In terms of investment risks, we've identified 2 warning signs 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.