In growth-driven stock markets, it's easy to forget the benefits of tried-and-true dividend stocks. But those benefits are on full display this year.
2026 has been a noticeable step change from 2025, as investors gravitate toward value-oriented sectors like consumer staples, energy, materials, and industrials amid mounting uncertainty. Investors are trying to separate artificial intelligence (AI) winners from losers as entire industries -- like software -- face steep declines.
Household and personal products giant Kimberly-Clark (KMB 1.75%) is already up 8.4% year to date. Here's why the dividend stock remains a great buy now.
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A good value in a red-hot sector
The consumer staples sector is on fire because it is relatively insulated from AI disruption fears and because investors tend to flock to value-focused sectors during times of uncertainty. Kimberly-Clark's core categories -- paper towels, toilet paper, tissues, diapers, feminine care, and adult care -- tend to hold up well no matter what the economy is doing.
However, like many consumer staples companies, Kimberly Clark's growth has slowed due to cost pressures and consumer pushback against price increases.
As of the time of this writing, the consumer staples sector is up 14.9% year to date compared to a 0.1% decline in the S&P 500 (^GSPC 1.25%).
Slowing growth, paired with higher stock prices, has pushed up the valuations of leading consumer staples giants. Walmart surpassed $1 trillion in market capitalization and is hovering around an all-time high with a whopping 47 price-to-earnings (P/E) ratio and 45.2 forward P/E compared to a 10-year median P/E of 29.2.
Similarly, Coca-Cola is hovering around an all-time high even though it expects 2026 organic revenue growth of just 4% to 5% and non-GAAP (adjusted) earnings-per-share growth of 5% to 6%. Coke sports a 24.3 forward P/E, which is higher than the S&P 500's 23.6 forward P/E.
Kimberly-Clark is unique because it still has a dirt cheap valuation despite the sectorwide run-up. Additionally, the stock yields 4.7% -- which is more than 2 percentage points higher than Coke's 2.6% yield and far higher than the yield of sector-based exchange-traded funds like the Vanguard Consumer Staples ETF, which yields just 2.1%, or the State Street Consumer Staples Select Sector SPDR ETF, which yields 2.6%.
NASDAQ: KMB
Key Data Points
Kimberly-Clark is dirt cheap
At just 14.6 times forward earnings compared to a 10-year median P/E of 22.4, Kimberly-Clark isn't just cheap -- it's deep in the bargain bin. Not only has the company's earnings growth slowed and its margins declined, but there's uncertainty about how Kimberly-Clark's acquisition of Kenvue (KVUE 1.27%) will play out.
Kenvue will expand Kimberly-Clark's portfolio beyond its core paper products focus -- with key brands like Neutrogena, Aveeno, Listerine, Tylenol, and Band-Aid. The acquisition is expected to close in the second half of 2026, deliver billions in annual synergies within a few years after the acquisition closes, and result in earnings growth in year two after the deal's close.
A top value stock for patient investors to buy now
Given that Kimberly-Clark is in a multiyear turnaround, some investors may prefer to flock to industry leaders like Walmart and Coke instead. But Kimberly-Clark could be a better long-term buy for investors looking for higher passive income and who believe in the company's ability to unlock steady growth from a revamped brand portfolio.
Like Walmart and Coke, Kimberly-Clark is also a Dividend King -- a member of an elite group of companies that have paid and raised their dividends for at least 50 consecutive years. Kimberly-Clark boosted its dividend for the 54th consecutive year on Jan. 27.
In sum, Kimberly-Clark offers a superior yield and a discounted valuation in a sector that has become a lot more expensive -- making it the ultimate dividend stock to buy with $1,000 right now.
