Kimberly-Clark de México, S. A. B. de C. V. (BMV:KIMBERA) Pays A Mex$0.51 Dividend In Just Four Days

Kimberly-Clark de México, S. A. B. de C. V. (BMV:KIMBERA) is about to trade ex-dividend in the next 4 days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase Kimberly-Clark de México S. A. B. de C. V's shares before the 1st of October in order to receive the dividend, which the company will pay on the 2nd of October.

The company's next dividend payment will be Mex$0.51 per share, on the back of last year when the company paid a total of Mex$1.86 to shareholders. 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 5.1% on the current share price of Mex$36.38. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Kimberly-Clark de México S. A. B. de C. V can afford its dividend, and if the dividend could grow.

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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 paid out more than half (72%) of its earnings last year, which is a regular payout ratio for 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 (80%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

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.

See 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?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at Kimberly-Clark de México S. A. B. de C. V, with earnings per share up 7.8% on average 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. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Kimberly-Clark de México S. A. B. de C. V has delivered an average of 9.7% per year annual increase in its dividend, based on the past 10 years of dividend payments. 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.

Final Takeaway

From a dividend perspective, should investors buy or avoid Kimberly-Clark de México S. A. B. de C. V? 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. To summarise, Kimberly-Clark de México S. A. B. de C. V looks okay on this analysis, although it doesn't appear a stand-out opportunity.

With that being said, if dividends aren't your biggest concern with Kimberly-Clark de México S. A. B. de C. V, you should know about the other risks facing this business. Case in point: We've spotted 1 warning sign for Kimberly-Clark de México S. A. B. de C. V you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.