How to Triple Kimberly-Clark Dividends with a Covered Call Options Strategy
As market volatility increases, more investors are shifting their focus from capital appreciation to generating stable income. Dividend-paying stocks remain one of the most reliable sources of cash flow, and Kimberly-Clark (KMB) has long held a solid place in the portfolios of long-term investors. Over the past month, the company’s shares have fallen by 11%, creating an opportunity for those willing to use additional tools to enhance returns.
One such tool is the covered call option strategy. Its concept is simple: the investor buys shares and simultaneously sells a call option with a set strike price and expiration date. In this way, the regular dividend income is supplemented by the premium received from selling the option, significantly boosting the overall yield.
One such tool is the covered call option strategy. Its concept is simple: the investor buys shares and simultaneously sells a call option with a set strike price and expiration date. In this way, the regular dividend income is supplemented by the premium received from selling the option, significantly boosting the overall yield.
Kimberly-Clark Corp (KMB)
For example, buying 100 shares of KMB would cost around $12,830. Selling a call option with a $135 strike and September 2025 expiration would bring in a premium of about $270. Over 89 days, this equals a 2.15% return, or roughly 8.8% annualized. When adding the stock’s dividend yield of 3.87%, the total annual yield rises to 12.64% — nearly three times more than that of a passive shareholder.
If, by expiration, KMB’s share price exceeds $135, the shares will be called away at that price, resulting in a total profit of around $941. This corresponds to an annualized return of over 30%. The downside, however, is the risk that the share price falls, in which case the option premium and dividends might not offset the capital losses.
Kimberly-Clark is a global manufacturer of consumer staples, with brands like Huggies, Kotex, and Depend recognized worldwide. The company operates in three main segments: personal care products, consumer tissues, and professional KC products. Its goods are sold through retail chains, pharmacies, hotels, foodservice companies, and healthcare facilities.
From a technical analysis perspective, KMB shares are currently in oversold territory, and implied volatility of about 21% is significantly above the yearly low. Analyst recommendations range from “Strong Buy” to “Strong Sell,” with the majority leaning toward “Hold.”
For investors who favor defensive assets with predictable income streams, a covered call strategy on Kimberly-Clark can be a way to boost current yields without giving up dividends. However, as with all options trading, it comes with risks and requires careful planning and discipline.
If, by expiration, KMB’s share price exceeds $135, the shares will be called away at that price, resulting in a total profit of around $941. This corresponds to an annualized return of over 30%. The downside, however, is the risk that the share price falls, in which case the option premium and dividends might not offset the capital losses.
Kimberly-Clark is a global manufacturer of consumer staples, with brands like Huggies, Kotex, and Depend recognized worldwide. The company operates in three main segments: personal care products, consumer tissues, and professional KC products. Its goods are sold through retail chains, pharmacies, hotels, foodservice companies, and healthcare facilities.
From a technical analysis perspective, KMB shares are currently in oversold territory, and implied volatility of about 21% is significantly above the yearly low. Analyst recommendations range from “Strong Buy” to “Strong Sell,” with the majority leaning toward “Hold.”
For investors who favor defensive assets with predictable income streams, a covered call strategy on Kimberly-Clark can be a way to boost current yields without giving up dividends. However, as with all options trading, it comes with risks and requires careful planning and discipline.
Remember, options are risky, and investors can lose 100% of their investment. This article is for educational purposes only and is not a recommendation for traders. Always conduct your own due diligence and consult with a financial advisor before making any investment decisions.