Kimberly-Clark de México, S. A. B. de C. V. (BMV:KIMBERA) Is About To Go Ex-Dividend, And It Pays A 6.8% Yield

Kimberly-Clark de México, S. A. B. de C. V. (BMV:KIMBERA) stock is about to trade ex-dividend in two 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase Kimberly-Clark de México S. A. B. de C. V's shares before the 4th of December in order to receive the dividend, which the company will pay on the 5th of December.

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$1.86 per share. Last year's total dividend payments show that Kimberly-Clark de México S. A. B. de C. V has a trailing yield of 6.8% on the current share price of Mex$27.34. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.

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. 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. 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. Dividends consumed 61% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

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?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Kimberly-Clark de México S. A. B. de C. V's earnings per share have risen 14% per annum over the last five years. Kimberly-Clark de México S. A. B. de C. V is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. This is a reasonable combination that could hint at some further dividend increases in the future.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Kimberly-Clark de México S. A. B. de C. V has increased its dividend at approximately 2.9% 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.

Final Takeaway

Is Kimberly-Clark de México S. A. B. de C. V an attractive dividend stock, or better left on the shelf? Higher earnings per share generally lead to higher dividends from dividend-paying stocks over the long run. However, we'd also note that Kimberly-Clark de México S. A. B. de C. V is paying out more than half of its earnings and cash flow as profits, which could limit the dividend growth if earnings growth slows. Overall, it's hard to get excited about Kimberly-Clark de México S. A. B. de C. V from a dividend perspective.

On that note, you'll want to research what risks Kimberly-Clark de México S. A. B. de C. V is facing. To help with this, we've discovered 2 warning signs for Kimberly-Clark de México S. A. B. de C. V that you should be aware of before investing in their shares.

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.