Kmb Brands
Source: Kimberly Clark.

The best dividend stocks have business models that are deceptively simple, generating regular income that shareholders can depend on year in and year out. The consumer-goods area is particularly fertile ground for dividends, and Kimberly Clark (NYSE:KMB) is among the best in the business, qualifying for recognition as a Dividend Aristocrat. With a track record of more than a quarter-century of annual dividend increases, Dividend Aristocrats are the cream of the crop in the dividend-investing world.

Kimberly Clark has a long and storied history of putting useful household products in the hands of homemakers across the globe. With brands like Kleenex, Huggies, and Scott towels, the company has built up a strong presence despite strong competition from larger players like Procter & Gamble (NYSE:PG) and Colgate-Palmolive (NYSE:CL). Below, we'll take a closer look at Kimberly Clark.

Dividend Stats on Kimberly Clark

Current Quarterly Dividend Per Share

$0.84

Current Yield

3.1%

Number of Consecutive Years With Dividend Increases

42 years

Payout Ratio

59%

Last Increase

March 2014

Source: Yahoo! Finance. Last increase refers to ex-dividend date.

Kimberly Clark just keeps growing
The biggest tailwind that Kimberly Clark, Procter & Gamble, Colgate, and several other major consumer-goods producers all enjoy is that the world has gradually become more prosperous, with wealth spreading out of high-income countries throughout the emerging-market world. The rise of the consumer class in formerly poor countries has given Kimberly Clark and its rivals brand new potential customers to buy their products, and Kimberly Clark, in particular, has done well in getting the most from its target markets. In its most recent quarter, Kimberly Clark's international operations saw organic sales climb 10%, with the companies specifically mentioning China, Brazil, Russia, and South Africa as areas where sales volumes have been on the rise.

But another appealing characteristic of Kimberly Clark during market turbulence is the fact that its ability to generate free cash flow is stable and consistent. With millions of customers remaining loyal to Kimberly Clark products irrespective of changing economic conditions, the company doesn't have to worry about the ups and downs of macroeconomic factors nearly as much as some of its counterparts in more cyclically sensitive areas.

As a result of its consistent profitability, Kimberly Clark has been able to grow its dividend steadily. During the past five years, Kimberly Clark's payout has climbed at a roughly 7% annual rate, and after more than four decades of annual increases, investors have come to take each year's boost in Kimberly Clark's payout as a given.

KMB Dividend Chart

KMB Dividend data by YCharts.

Some investors were concerned, though, when Kimberly Clark reduced its dividend growth rate earlier this year. With just a 3.7% increase, Kimberly Clark's dividend hike was the smallest since 2009, reflecting some of the difficulties the company has faced. In particular, the strong U.S. dollar has had a substantial impact on Kimberly Clark's earnings, with currency impacts holding back growth to a virtual standstill even as currency-adjusted growth figures remained healthily robust.

What's next for Kimberly Clark?
One interesting move Kimberly Clark is pursuing is the spinoff of its healthcare unit. The new entity, to be known as Halyard Health, will concentrate on surgical products and medical devices, freeing Kimberly Clark to focus even more heavily on its core consumer-brands business. With the unit having the lowest return on assets of Kimberly Clark's four major divisions, healthcare is an obvious choice for the company to break off in order to make the remaining whole look even more attractive going forward.

Kmb Scottissue

Source: Kimberly Clark.

Yet, of more immediate importance is whether Kimberly Clark will keep producing the growth that investors expect. Last quarter, Kimberly Clark narrowed the top end of its previous guidance range by $0.05 per share, arguing that higher costs for input materials, and a sluggish Mexican economy, held back its overall results. With the dollar also remaining strong, this quarter's results at Kimberly Clark could also look less than stellar.

Don't worry about Kimberly Clark's dividend -- yet
Fortunately, Kimberly Clark has some wiggle room to withstand the short-term impact of adverse currency moves without threatening its ability to boost its dividend in the future. Nevertheless, after the relatively small dividend increase earlier this year, dividend investors will want to see more exciting growth from Kimberly Clark before they can reasonably expect future dividend growth to accelerate.

At this point, Kimberly Clark seems likely to produce that growth, and therefore will likely remain a Dividend Aristocrat into its fifth decade of dividend increases. Still, investors need to keep an eye on Kimberly Clark to make sure that dividend growth comes back when currencies move in a more favorable direction for the consumer goods giant.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Kimberly Clark and Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.