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Cleaning Up With Consumer Goods Makers

CFO Buthman elaborated further by saying, "We continue to allocate capital and shareholder from ways with the first quarter dividend payments in share repurchases totally nearly $800 million. In February we announced our 41st consecutive annual increase in the dividend. The 9.5% increase should help maintain our position as a top-tier dividend payer."

He said the company repurchaed $500 million worth of stock in the quarter and expects full-year repurchases to be between $1 billion and $1.2 billion.

As our own Jim Cramer likes to say, share repurchase programs are like a "tax-free dividend" since it decreases dilution and helps boosts the price of the stock, which Friday's leap higher fully demonstrated. The chart below gives us the one-year snapshot of KMB's share price exuberance but doesn't reflect the results of Friday's financial quarterly report. KMB ChartKMB data by YCharts

Like so many other high-flying dividend dominators, KMB's share price has been driven more by the trailing 12-month revenue per share than by the quarterly year-over-year diluted EPS. The cost-cutting success of the company's leadership should be given some credit as well.


How about the other three members of what I call "The Four Horsemen of Consumer Goods" companies? Friday was a great day for them as well.

Sure enough, Clorox (CLX) hit a 52-week high of $90.08 Friday before closing at $89.55. It's selling at 19 times forward earnings and the dividend yield is down to 2.86%. CLX marches into the earnings confessional on May 1.

Then there's Colgate-Palmolive (CL)which also hit penthouse pricing today to an all-time high of $119.89 on lower-than-average volume. Also selling at 19 times forward earnings this "horseman of consumer goods" has a dividend yield-to-price of only 2.27%.

Yes, I'm aware that the 10-year Treasury bond only yields 1.7% and state income tax-free. But I wouldn't feel comfortable having you chase that yield either. And my discomfort with these sky-high consumer goods companies has more to do with how they will sustain their share price levels. CL's dividend payout ratio is approaching 50% while KMB's is around 67%! Yikes!

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