Kimberly-Clark’s Upcoming Dividend Sparks Interest Among Investors
This morning, a “Potential Dividend Run Alert” was issued for Kimberly-Clark Corp. (NYSE: KMB) via the Dividend Alerts service. Let’s delve into this situation for more insight.
Understanding Dividend Runs
What exactly is a “Dividend Run”? This concept highlights the expected behavior of a stock on its ex-dividend date, a principle we first encountered at a past ValueForum conference.
What is an Ex-Dividend Date?
The ex-dividend date is the trading day on which buyers no longer qualify for an upcoming dividend. To receive the dividend, shares must be purchased before this date. Generally, stock prices are expected to drop by the dividend amount on this date—assuming no other factors affect stock prices. For example, if a buyer expects a $1.26 dividend before the ex-dividend date but loses that entitlement after it, a price drop makes logical sense. Without this adjustment, buyers would effectively pay $1.26 more for the same shares.
Rising Expectations Ahead of Dividend Announcements
If stocks anticipate a drop by the dividend amount on the ex-date, they could be expected to rise before the dividend is declared. If a stock only declines at each ex-date and never rises beforehand, shares might eventually decline to zero, which would not reflect a company’s ongoing profitability and commitment to dividends. Thus, stocks typically see a natural “pressure” to rise ahead of a declared dividend, suggesting a potential Dividend Run.
Varied Strategies Among Dividend Investors
Different dividend investors have varying strategies regarding the timing of their investments. Strategies range from targeting specific dates for buying and selling to employing dollar-cost averaging. Some investors buy just before the ex-dividend date to capture the dividend, while others prefer to sell the day before to optimize capital gains. A common approach is to purchase shares approximately two weeks before the ex-dividend date.
Kimberly-Clark Dividend Example
Taking the $1.26/share dividend that went ex-dividend on March 7, 2025, as an example: on the trading day before, March 6, shares closed at $142.41. Two weeks prior, on February 20, shares were priced at $138.97. This indicates that KMB shares appreciated by $3.44 leading up to the dividend payment.
Performance Overview of Past Dividends
In analyzing the previous four dividends paid by KMB, this investment strategy would have led to capital gains exceeding the dividend amount each time, with a total “Dividend Run” gain of $11.82. In contrast, the total dividends during this timeframe amounted to $4.92. Here’s a summary:
| Ex-Dividend | Price 2 Weeks Prior | Price 1 Day Prior | Run Gain/Loss | |||
|---|---|---|---|---|---|---|
| 03/07/25 | 1.26 | 02/20/25 | 138.97 | 03/06/25 | 142.41 | +3.44 |
| 12/06/24 | 1.22 | 11/20/24 | 136.37 | 12/05/24 | 138.15 | +1.78 |
| 09/06/24 | 1.22 | 08/21/24 | 144.58 | 09/05/24 | 148.05 | +3.47 |
| 06/07/24 | 1.22 | 05/22/24 | 133.87 | 06/06/24 | 137.00 | +3.13 |
| Div Total: | 4.92 | “Divvy Run” Total: | +11.82 | |||
Looking Ahead
In approximately two weeks, Kimberly-Clark Corp. (NYSE: KMB) will go ex-dividend with a dividend of $1.26 per share. Will the historical trend of Dividend Runs continue?
Upcoming Dividend: 1.26/share
Ex-Div Date: 06/06/25
Payment Date: 07/02/25
Dividend Frequency: Quarterly
While past performance is not always indicative of future results, Kimberly-Clark remains a noteworthy stock for investors interested in Dividend Runs, offering an implied annualized yield of 3.57%.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
