The Procter & Gamble Company (PG), Kimberly-Clark Corp (KMB): Prospects Look Bright For Household And Personal Product Industries

Page 1 of 2

Many investors, understandably, begin to worry about their stocks when they encounter economic uncertainty. Stocks, as a consequence, can show widely varying results because of how much the ups and downs of the market are tied to investor expectations. Investing in what are referred to as “defensive sector stocks” can minimize exposure to such economic-related risk.

The traditional wisdom about the best defensive sector stocks for investors focuses of food, clothing, and shelter, essentials that everybody needs. Such stocks are among the most resistant during periods of economic downturns. Accordingly, they represent a relatively safe opportunity for investment during a down economy.

Such defensive stocks pay higher dividends, combined with steady price appreciation. This is particularly true of household and personal product industries stocks. In picking out such stocks, it is best to focus on those companies that present good cash flows, balance sheets, and income statements to lend support to both dividends and share price appreciation.

In this article, I pick three companies from the household and personal product industries for their consistently growing returns. These companies all have solid financial statements to back continuing returns for shareholders. Let’s evaluate each company’s financial situation to scan its ability to uphold increasing returns for investors.

The Procter & Gamble Company (NYSE:PG) offers branded consumer packaged goods. The company markets its products in approximately 180 countries. Procter & Gamble has been consistently paying dividends since 1890. On top of this, over the past 57 years, it has been consistently able to increase its dividends. Recently, it announced a 7% increase in dividends, which brought them to $0.6015 cents per share.

2011-06 2012-06 TTM
Revenue $82.55 $83.68 $83.32
Gross Margin 50.6% 49.3% 49.6%
Operating Margin 19.2% 15.9% 17.8%
EPS $3.93 $3.66 $4.41

Morningstar.com [Revenue in billions]

For dividend investors, the company has been displaying a solid income statement. It has been able to increase its margins over the past few quarters. It has one of the best operating and net margins among the industry average. With the improvement in consumer spending, and The Procter & Gamble Company (NYSE:PG)’s ability to improve margins, in the trailing twelve months (TTM) its earnings per share (EPS) increased to $4.41.

The Procter & Gamble Company (NYSE:PG)On the other hand, the company has the potential to generate strong cash flows. It’s free cash flows adequately cover current dividends. In the TTM, its free cash flow stood at $10.695 billion, while dividend payments stood at $6.332 billion. The company is also seeking to reduce its share count, and, in the TTM, repurchased $6.244 billion of shares.

In order to increase returns for shareholders, the company is focusing on its biggest profitable businesses, and on innovations. The Procter & Gamble Company (NYSE:PG) is concentrating more on developing markets for potential growth. Generally, these markets offer a better opportunity for growth.

With this strategy, the company is looking to enhance organic sales 1%-2%, quicker than the overall market in which it competes. The Procter & Gamble Company (NYSE:PG) is anticipating increasing its EPS from high single-digits to low double-digits.

Kimberly-Clark Corp (NYSE:KMB) is engaged in the manufacturing and marketing of a variety of essential products to better people’s lives around the globe. Kimberly-Clark was named among the top dividend-payers in the consumer defensive sector. The firm offers a quarterly dividend of $0.81. Recently, the company increased its quarterly dividend by 9.5%. It has a long history of dividends and has raised them for 41 consecutive years.

Recently, Kimberly Clark Corp (NYSE:KMB) announced first quarter results, with operating profit of $783 million. At the end of Q1, sales were up by only 1%, while its solid margins led it to increased operating profit by 12%. However, the company has shown improvement in its organic sales. Its organic sales rose by 3%, together with increases of 6% in North American consumer tissue and 5% in Kimberly-Clark International.

Furthermore, its cash flows are also in a solid position. It increased its operating cash flows to $607 million at the end of Q1. Kimberly Clark Corp (NYSE:KMB) is also spending heavily in growth opportunities. In Q1, its capital spending stood at $274 million. With the solid improvement in cash flows, it is also working on a share repurchase program.

For the Q1, Kimberly Clark Corp (NYSE:KMB) repurchased 5.5 million shares. As an indication of its strong cash flows, it returned nearly $800 million to investors through a combination of dividends and its repurchase program. With a smart business strategy and solid financial performance, it raised its full-year earnings targets from $5.60 to $5.75.

The Clorox Company (NYSE:CLX) is a manufacturer and marketer of consumer products. The company sells its products through grocery stores, mass merchandisers, and other retail outlets. Clorox operates in four main business segments, namely cleaning, household, lifestyle, and international.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!