Kimberly-Clark's Dividend Under Pressure from Acquisition and Slowing Growth

Two Dividend Kings, Kimberly-Clark (KMB) and Procter & Gamble (PG), have raised their dividends for 54 and 70 consecutive years, respectively. Both companies are facing pressure from consumers who are under increased economic strain, but only one has a dividend that is comfortably covered by its cash flow.

Kimberly-Clark's dividend payout ratio is a stretched 92% over the last twelve months, while Procter & Gamble's ratio is a steadier 68%. The EU's decision on Kimberly-Clark's pending $48.7 billion acquisition of Kenvue (KVUE) is due by October 13.

Kimberly-Clark's sales are not moving much, and the company cut its 2026 outlook to high-single-digit adjusted EPS growth from double digits in August. The dividend has been putting pressure on cash flow, consuming 92% of free cash flow over the last twelve months.

Procter & Gamble (PG) pays out $10.23 billion in dividends against $15.15 billion of free cash flow, a 68% cash dividend payout ratio. The company has been using excess cash for buybacks, spending $5.03 billion over the last 12 months.

Analyst suggests that Procter & Gamble gets the nod because its dividend has more room around it, and the company generates nearly $5 billion more in free cash flow than it needs to cover the dividend.