1 Great Dividend You Can Buy Right Now

Dividend stocks are everywhere, but many just downright stink. In some cases, the business model is in serious jeopardy, or the dividend itself isn't sustainable. In others, the dividend is so low it's not even worth the paper your dividend check is printed on. A solid dividend strikes the right balance of growth, value, and sustainability.

Today, and one day each week for the rest of the year, we're going to look at one dividend-paying company that you can put in your portfolio for the long term without too much concern. This isn't to say these stocks don't share the same macro risks that other companies have, but they are a step above your common grade of dividend stock. For reference, here is last week's selection.

This week, I'm going back to the basics of what makes an income stock great: brand recognition. Let's take a closer look at why Kimberly-Clark (NYS: KMB) is a dividend you can count on.

Recognition, recognition, recognition!
The key to a great income producer over time is stability, and there are very few stocks that can claim the type of business stability that Kimberly-Clark brings to the table. The company, which boasts a portfolio of brand-name products including Kleenex and Huggies, is just as much a part of Americana as apple pie.

You won't get mind-numbing growth here, but you will get earnings and cash flow consistency. The company has been taking steps recently to help improve its slow-but-steady growth that include restructuring its pulp and tissue operations, expanding internationally, and pricing its products aggressively. While these moves weren't enough to save the company from missing Wall Street's EPS expectations last quarter, you'd be foolish to think that Kimberly-Clark's glory days are behind it.

In spite of rising inflationary costs, Kimberly-Clark has used that notable brand recognition to pass along rising prices to consumers. In fiscal 2012, the company is targeting 3%-4% organic sales growth (which is outstanding for a consumer-goods company of its size), and it plans to get there by increasing selling prices and offering a favorable product mix.

If you've got an issue, here's a tissue
Aside from the company's impressive dividend growth, it hasn't exactly been easy-sledding for Kimberly-Clark over the past decade:

KMB Payout Ratio TTM Chart
KMB Payout Ratio TTM Chart

KMB Payout Ratio TTM data by YCharts

Kimberly-Clark's payout ratio isn't exactly in danger territory yet, but it has been rising as a percentage of earnings for years. As Fool Dan Caplinger noted just days ago, Kimberly-Clark is much more susceptible to paper and pulp prices than are Colgate-Palmolive (NYS: CL) and Procter & Gamble (NYS: PG) , and Kimberly-Clark has had a hard time boosting its margins as a result. Similarly, since Johnson & Johnson (NYS: JNJ) , has a diverse pipeline of medical products with higher margins to fall back on, it hasn't seen nearly the same margin contraction.

Still, there are plenty of positives here, considering that all companies are seeing their payout ratios rise. For one, Kimberly-Clark has boosted its dividend for an impressive 40 years in a row. Over the past decade, the company has grown that dividend annually by an average of 9.5% which, again, is impressive for a company of its size. Have a look for yourself:

Source: Dividata.

Second, it has a portfolio of products that practically sells itself. Three out of four of its business segments saw growth in 2011, with only the tissue business being flat because of lower volumes associated with its restructuring but higher net selling prices.

Foolish roundup
If Kimberly-Clark can successfully expand internationally, I'd be pretty much convinced that there's little concern that its 40-year dividend growth streak is anywhere near ending, despite the rising payout ratio. Currently yielding 4%, this dividend aristocrat is a perfect model of a buy-and-hold income-producing stock that could be a great addition to any portfolio.

If you're craving even more dividend ideas, I invite you to download a copy of our latest special report, "9 Rock-Solid Dividend Stocks," which is loaded with income-producing companies hand-selected by our top analysts. Best of all, this report is free, so don't miss out!

At the time thisarticle was published Fool contributorSean Williamshas no material interest in any of the companies mentioned in this article. He finds it amusing that every stock in this article has a hyphen or an ampersand in its name -- he's weird like that. You can follow him on Motley Fool CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.The Motley Fool owns shares of Johnson & Johnson.Motley Fool newsletter serviceshave recommended buying shares of Kimberly Clark, Johnson & Johnson, and Procter & Gamble, as well as creating a diagonal call position in Johnson & Johnson. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policythat always offers free hugs.

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