Gavin McMaster
3 min read
In This Article:
With markets becoming more volatile, investors might be more interested in generating income rather than capital gains.
Kimberly-Clark (KMB) has long been a staple of dividend investors and with the stock down 11% in the last month, it provides an attractive opportunity for savvy investors.
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Triple Your Kimberly-Clark Dividend with this Options Strategy
Using options we can more than triple the yield on our KMB shares by using a covered call strategy.
A covered call involves selling call options against a stock position.
KMB Covered Call Example
Buying 100 shares of KMB would cost $12,830. The September 19, 2025 call option with a strike price of $135 was trading around $2.70 on Friday, generating $270 in premium per contract for covered call sellers.
Selling the call option generates an income of 2.15% in 89 days, equalling around 8.82% annualized.
Covered call traders also receive the yearly dividend of $4.96 which is a yield of 3.87%.
The covered call option premium brings the total yield up from 3.87% to 12.64%.
That’s a pretty attractive yield for a low-beta, defensive stock and almost triple want regular shareholder receive.
That assumes the stock stays exactly where it is. What if the stock rises above the strike price of $135?
If KMB closes above $135 on the expiration date, the shares will be called away at $135, leaving the trader with a total profit of $941 (gain on the shares plus the $270 option premium received). That equates to a 7.49% return, which is 30.73% on an annualized basis.
Of course, the risk with the trade is that the KMB might drop, which could wipe out any gains made from selling the call.
Company Details
Kimberly-Clark Corporation is principally engaged in the manufacture and marketing of a wide range of consumer products around the world.
The company sells its products to supermarkets; mass merchandisers; drugstores; warehouse clubs; variety and department stores; retail outlets; manufacturing, lodging, office building, food service, and health care establishments; and high volume public facilities.
Based on product grouping, the company conducts its operations in three business segments namely Personal Care, Consumer Tissue, and K-C Professional.
The Personal Care segment includes products like disposable diapers, training and youth pants, swimpants, baby wipes, feminine and incontinence care products, and other related products. Products in this segment are sold under the Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Kotex, U by Kotex, Intimus, Depend, Plenitud, Poise and other brand names.
