We recently compiled a list 10 Undervalued Dividend Aristocrats Worth Buying, According to Hedge Funds. In this article we’ll take a look at where Kimberly-Clark Corporation (NYSE: KMB ) stands compared to other undervalued Dividend Aristocrats, according to hedge funds.
A Dividend Aristocrat is an S&P 500 company that not only pays regular dividends to shareholders, but also increases its payout every year. To qualify as a Dividend Aristocrat, a company must have consistently raised its dividend for at least 25 consecutive years.
Michael Clarfeld, portfolio manager at ClearBridge, recently talked about why companies that continue to increase their dividends are well-positioned to weather the challenges of 2025. . He pointed to strong employment data, upbeat consumer confidence and confident businesses, especially after the election. The Trump administration’s pro-business policies could drive investment and growth, which sounds great, but there’s a catch. For example, bringing manufacturing back to the United States would create jobs and raise wages, but could also increase business costs. After two years of strong performance, Clarfield sees little scope for big capital gains in 2025. That said, he sees opportunities in sectors such as European and global consumer staples and U.S. energy infrastructure.
Clarfield is a big fan of dividend growth stocks, calling them timeless investments. They can act as a safety net during market fluctuations and provide a steady stream of income, which is particularly useful when capital appreciation feels out of reach. He also highlights how dividends can help protect your purchasing power by keeping up with inflation. In his view, dividend growth is a smart and solid strategy for a potentially bumpy 2025.
Paul Baiocchi of SS&C ALPS Advisors thinks dividend investing is a smart move and expects the Federal Reserve to ease interest rates. Baiocchi said investors are moving away from money markets and fixed income into dividend stocks, especially leveraged companies that can benefit from lower interest rates. Likewise, ETF Action’s Mike Akins also views dividend ETFs as a defensive strategy, stressing that the companies included typically have strong balance sheets. He noted that the growing popularity of dividend-focused ETFs suggests that consistent dividends can give investors confidence in a company’s stability and financial health. Both experts agree that dividends provide a sense of durability and drawdown protection in uncertain markets.
In the foreground is a pile of disposable diapers, with a mother and her baby in the background.
In this article, we selected stocks from the Dividend Aristocrats list that had a P/E ratio below 20 as of December 23. Price to earnings ratio standard. The stocks are listed below in ascending order based on the number of hedge fund holders per company.
Here at Insider Monkey, we’re obsessed with stocks that hedge funds are heavily invested in. The reason is simple: our research shows that we can outperform the market by mimicking the top hedge funds’ stock picks. Our quarterly newsletter strategy, which selects 14 small- and large-cap stocks each quarter, has returned 275% since May 2014 and beat the benchmark by 150 percentage points (See more details here).
Dividend yield as of December 23: 3.72%
Number of hedge fund holders: 45
Price to Earning Ratio: 17.01
Founded in 1872 and headquartered in Dallas, Texas, Kimberly-Clark Company (NYSE: KMB) manufactures and sells personal care and consumer tissue products. The company operates through three segments – Personal Care, Consumer Tissue and KC Professional. Consumer demand for quality products continues to grow in both developed and emerging markets, supported by trends such as the aging population driving adult care. This makes KMB one of the best Dividend Aristocrat stocks to buy.
Kimberly-Clark’s (NYSE: KMB) gross margins have continued to improve over the past eight quarters, averaging 37% for the full year. The company remains confident of achieving its long-term goals of gross margin of at least 40% and operating margin of 18-20% by the end of this decade. Kimberly-Clark (NYSE: KMB) reported third-quarter sales of $5 billion, down 4% from the same period last year. The decline was primarily due to a 3% hit from unfavorable currency exchange rates and a 1% impact from the sale of the PPE business in July.
Looking ahead, Kimberly-Clark (NYSE: KMB ) expects stronger fourth-quarter results and increased investments in advertising and brand support. The company expects top-line growth to improve, driven by a sales mix-led strategy while addressing one-time and external factors. Despite these challenges, Kimberly-Clark has made steady progress on margins and remains committed to long-term growth.
So far this year, Kimberly-Clark (NYSE: KMB ) has $2.4 billion in operating cash, up from $2.3 billion last year, primarily due to improved operating performance. The company returned $2 billion to shareholders through dividends and stock repurchases. Total debt decreased to $7.5 billion as of September 30, 2024, from $8 billion at the end of 2023. Payable on 3rd, 2025, to shareholders of record as of December 6, 2024.
Insider Monkey’s third-quarter data shows that 45 hedge funds are bullish on Kimberly-Clark Co. (NYSE: KMB ), compared with 43 funds in the previous quarter. Deshaw is the major shareholder of the company with 1.28 million shares valued at $182.35 million.
Overall, KMB Ranked fourth We’ve put together a list of undervalued Dividend Aristocrats worth buying, based on hedge fund data. While we acknowledge KMB’s growth potential, we firmly believe that certain AI stocks have greater promise of delivering higher returns in shorter time periods. If you’re looking for an AI stock that’s more promising than KMB but trades at less than 5x earnings, check out our report on the stock The Cheapest Artificial Intelligence Stocks.
Read next: The 8 best wide-moat stocks and the 30 most important artificial intelligence stocks to buy now, according to BlackRock.
Disclosure: None. This article was originally published in Expert monkey.
