This Stock's Dividend Has Grown For 40 Straight Years
In this low interest rate environment, investors have turned to high-yielding blue-chips as a source of retirement income. This five-part series will outline what I believe to be the top five dividend aristocrat stocks, most suitable for a retiree's portfolio.
In recent years, retirement planning has become a whole lot harder. With interest rates near all-time lows, keeping money in the bank just doesn't add up.
One key alternative is the stock market. Although investing in stocks can at times be tricky, a safe haven is high-quality, defensive, dividend-paying stocks. Within this group are my favorites: the "dividend aristocrats."
Dividend aristocrats are companies listed on the S&P 500 that have increased their dividend every year for at least the past 25 years. These stocks have weathered many storms. They are companies with stable and reliable business models. Most often, they are solid money makers. While creative accounting can mask shortfalls in revenues and sometimes even earnings, it can't hide rising dividends for very long.
One of my favorite dividend aristocrats is consumer staples giant Kimberly-Clark (NYSE: KMB).
This international health, hygiene and paper company operates in more than 150 countries across the globe. Its most popular brands include Kleenex tissue, Scott toilet paper, Huggies and Pull-Ups diapers, Kotex sanitary products and Depend incontinence products.
Aggressive cost-cutting, expansion into emerging markets and the introduction of higher-end, higher-margin products are factors that have been driving the stock higher.
But, what makes the company so attractive, in addition to its capital gains potential, is its healthy dividend and solid projected revenue and profit-growth outlook.
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This dividend aristocrat currently offers a healthy 3.8% annual yield. In contrast, interest rates on 10-Year U.S. Treasury notes are currently around 2.1%, just more than half of the Kimberly-Clark yield.
Kimberly-Clark's dividend has consistently increased for the past 39 years. Best yet, the company just increased the dividend again -- marking the 40th straight year of dividend increases.
From a technical perspective, Kimberly Clark's stock is on a strong growth trajectory.
As the above chart shows, shares have been on a major uptrend for the past two years. In August 2011, an accelerated uptrend line formed as the stock rose from a low of $59.17 to a late 2011 high of $73.49.
The stock then entered a "U" shape basing pattern. Basing patterns are bullish and usually imply that the stock will move higher. When a stock completes a basing pattern or "breaks out," you can use a technical analysis concept called the measuring principle to forecast an immediate price target.