Motley Fool: Kimberly-Clark is getting bigger and bigger

Kimberly-Clark (Nasdaq: KMB) is acquiring Kenvue (NYSE: KVUE), creating a health and wellness giant with $32 billion in revenue, and 10 brands generating over $1 billion in annual sales each (such as Kimberly-Clark’s Kleenex and Huggies and Kenvue’s Tylenol and Listerine).

Kimberly-Clark is expecting a net benefit of $2.1 billion within four years of closing the deal. The larger scale will also help the combined company navigate the issues Kenvue has faced since becoming independent in 2023, following its separation from Johnson & Johnson.

The combined company should be in a strong financial position to continue paying a growing dividend. While Kimberly-Clark is taking on debt to fund the deal, it aims to reduce its debt level quickly. Kimberly-Clark’s dividend yield was recently a hefty 4.7%.

The deal isn’t without risk, though. While the combined company will be in a better position to weather potential legal issues, they could still be costly. This could weigh on its stock and potentially impact its ability to grow the dividend in the future. KimberlyClark’s recent share price is attractive, though, with a recent forward-looking price-to-earnings (P/E) ratio of 14.1, well below its five-year average of 18.9. (The Motley Fool owns shares of and recommends Kenvue.)

Ask the fool

Q. What is “earnings season”? – N.T., Jacksonville, North Carolina

A. It’s when many companies’ earnings reports are released. Public companies (those with publicly traded stock) must issue three quarterly “10-Q” reports and an annual “10-K” report (for their fourth quarter), detailing their earnings and financial condition.

Many companies conclude their years at the end of December, while others choose March, June or September. Earnings reports are typically issued a few weeks after the end of each quarter, so there are four “earnings seasons” throughout the year: generally, from mid-January through February, from mid-April through May, from mid-July through August and from mid-October through November.

Earnings seasons are noteworthy because if results are better than predicted or expected, a company’s stock price can jump – and, conversely, it can sink on worse-than-expected results. Reports also offer investors the latest information on revenue, earnings, growth trends and more, and they can result in analysts revising their opinions on companies.

It’s a good idea to learn to read and understand financial statements yourself – and to keep up with your holdings’ earnings reports

Q. Do you generally have to work for a company in order to buy its stock? – M.P., Kenosha, Wisconsin

A. Generally not, though employees of some companies sometimes do get to buy shares at a discount. You can buy shares of thousands of publicly traded companies – from Adobe and Apple to Zebra Technologies and Zoetis – once you open a brokerage account. (Read about some good brokerages here: Fool.com/money/buyingstocks.) Before investing in stocks, read up on the topic. Or you could just start with a low-fee, broadmarket index fund such as one that tracks the S&P 500.

My Dumbest Investment

My most regrettable investing move? Well, in 1982, I had $2,000 to invest. My broker suggested investing in Nike, but John McEnroe represented Nike, and I couldn’t stand him. So I went with a new company whose chicken was delicious. Unfortunately, not enough diners agreed, and the company soon went under. Nike, on the other hand, seems to have done rather well. – L.K., via email

The Fool Responds: Yes, Nike has indeed done rather well, averaging annual gains of 10.8% just over the past 30 years, versus 8.9% for the S&P 500 over the same period. (With dividends reinvested in more shares along the way, those numbers would be 11.4% vs. 10.2%.) Nike went public in 1980, so you’d have gotten in near the ground floor in 1982 and would have profited even more.

But only hindsight is 20/20 when it comes to stocks. No one could have known back then that Nike would be worth more than $95 billion late in 2025. Had you removed emotions from your decisionmaking, you might have done quite well, but it’s also fair to avoid companies where you have moral or ethical objections, because there are many other wonderful companies that can make you richer over many years.

(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@ fool.com.)