This Dividend King Just Offered a Buy-the-Dip Opportunity

This Dividend King Just Offered a Buy-the-Dip Opportunity

Thomas Niel, The Motley Fool

Mon, August 31, 2026 at 4:35 PM GMT+3 3 min read

With 55 years of consecutive dividend growth, Kimberly-Clark (NASDAQ: KMB) is one of the Dividend Kings. Despite this distinction, bearish sentiment persists for this consumer staples stock.

Why? Blame it on its pending acquisition of Kenvue (NYSE: KVUE). This deal, which adds brands like Tylenol and Band-Aid to Kimberly-Clark's existing portfolio of brands like Kleenex and Huggies, seems on paper to be a great opportunity for cost and growth synergies, but concerns about possible litigation risks persist.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

Kimberly-Clark, the Kenvue deal, and the market's response

When Kimberly-Clark first announced the Kenvue deal last November, shares fell 15% immediately. By the spring, the stock had fallen more than 20% below pre-announcement levels. Yet while it's recovered since then, Kimberly-Clark remains down by around 8.1%.

The proposed merger is currently under regulatory review, but so far the deal appears set to close on schedule, sometime between now and the end of 2026. Mixed views notwithstanding, there are strong reasons for investors to be excited about this deal, rather than continuing to treat it as a great uncertainty.

Debunking the fear, uncertainty, and doubt

Deal skeptics have two key issues with the proposed merger. First, they believe that buying Kenvue, which was arguably spun off from Johnson & Johnson due to its sluggish growth, will result in an even larger slow-growing company. Second, there's the whole issue regarding allegations that Tylenol can cause autism and ADHD.

If lawsuits related to this prove successful, it could saddle Kimberly-Clark with significant liabilities. That said, consider these counterpoints. First, even partially hitting the $2.1 billion in projected annual cost and revenue synergies from the combination could significantly improve profitability.

Regarding litigation risks, consider that Kimberly-Clark was well aware of the legal risk related to Tylenol claims ahead of the deal. If profitability remains steady, or better yet, improves, Kimberly-Clark, which currently has a forward dividend yield of around 4.7%, will likely remain a Dividend King. Successful execution of the merger, coupled with better-than-feared litigation outcomes, could also bode well for the combined company's post-merger valuation.

Should you buy stock in Kimberly-Clark right now?

Before you buy stock in Kimberly-Clark, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Kimberly-Clark wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $440,710!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,335,252!*

Now, it's worth noting Stock Advisor's total average return is 978% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.

See the 10 stocks »

*Stock Advisor returns as of August 31, 2026.

Thomas Niel has no position in any of the stocks mentioned. The Motley Fool recommends Johnson & Johnson and Kenvue. The Motley Fool has a disclosure policy.

This Dividend King Just Offered a Buy-the-Dip Opportunity was originally published by The Motley Fool