Robert Abernathy, KMB's Group President of Europe, Global Nonwovens and Continuous Improvement and Sustainability, who appears to be the insider with the largest number of KMB shares (134,568 as of Feb. 21) had to be pleased. Based on KMB's closing share price on Thursday of $101.36 his shares would be worth over $538,000 more by the time KMB closed Friday at $106.10. If you want to see all the details of this terrific earnings release and quarterly financial report look at the company's press release at its easy-to-navigate Web site. The "Executive Summary" is a sight to behold, the picture of a well-run company operating with shareholder's interests at heart. Chairman and Chief Executive Officer Thomas Falk said, "We are off to an excellent start to the year. We achieved solid organic sales growth compared to a strong year-ago result, including benefits from targeted growth initiatives and product innovations. We improved adjusted gross margin by 140 basis points and adjusted operating profit margin by 200 basis points." Falk also celebrated the fact that "we delivered all-time record adjusted earnings per share, reflecting continued momentum in K-C International, $85 million of cost savings from our ongoing FORCE program and above-plan volume growth in North American consumer tissue. Finally, we improved cash flow and returned $0.8 billion to shareholders through dividends and share repurchases."
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!