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With a decent amount of capital and some patience, investors can harness the powers of compounding and time to generate wealth-building income with dividend growth stocks.
For market participants seeking the alluring combination of reliable payout growth and (usually) favorable share price appreciation, the consumer staples sector is an ideal place to start. A dozen consumer defensive stocks, including Huggies maker Kimberly-Clark (NASDAQ: KMB), are Dividend Kings, or corporations with payout-increase streaks of at least 50 years.
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Kimberly-Clark's run of consecutive dividend increases spans 55 years. That is to say, this company's dividend growth started before disco went mainstream and has proven infinitely more durable, but there's more to dividend stocks than just fun facts.
To be fair, $10,000 isn't small change, but for those who can afford it, it's a solid starting point with Kimberly-Clark. Based on the Friday, Nov. 5, closing price of $108.43, $10,000 buys 92.2 shares of the Kleenex maker. To make the math easy, round that down to 92 and multiply by the annual dividend of $5.12 per share, and the result is $471.04.
Skeptics might say $471 is no big deal, but smart investors know better. That figure represents just one year's dividends from Kimberly-Clark based on the current payout. As confirmed by its status as a Dividend King, the Cottonelle maker is likely to continue boosting its dividend, meaning the income stream investors receive from this stock is likely to be higher in 2027 and beyond.
Of course, there's no such thing as a sure thing in investing, and some Dividend Kings have turned into dividend offenders. This consumer staples giant scores well in terms of dividend safety, and its payout's long-term growth rate, though not exhilarating, could be enough to beat inflation if the Federal Reserve is successful in driving the annual inflation rate back to around 2%.
For those focusing on end-of-year/2027 portfolio possibilities, Kimberly-Clark has something to offer, too. Consumer staples stocks are chic again, and not just because of dividends, but also because they're ideal antidotes at a time when the artificial intelligence (AI) trade is vulnerable.
On Nov. 2, Kimberly-Clark finalized its nearly $49 billion purchase of Kenvue. That deal is one of the largest in the history of the consumer goods sector, implying that there may be some level of integration risk investors need to be mindful of.
Still, the big deal may work in the acquirer's favor. It's adding well-known brands including Listerine and Tylenol, lifting its suite of $1 billion-plus-in-annual-revenue brands to 10 while expanding its reach into the fast-growing consumer healthcare category.
Kimberly-Clark is forecasting $1.9 billion in cost efficiencies over the first three years following the marriage. That goal is realistic because Kimberly-Clark management runs an efficient ship, and there's analyst sentiment suggesting the company sees opportunities to do the same with some overlooked elements of the Kenvue equation.
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Todd Shriber has no position in any of the stocks mentioned. The Motley Fool recommends Kenvue. The Motley Fool has a disclosure policy.
Kimberly-Clark Has Raised Its Dividend for 55 Straight Years. Here's How Much $10,000 Invested Pays Annually. was originally published by The Motley Fool
