Dividend‑Yield Comparison
KP Tissue (KPTI) announced a quarterly cash dividend of $0.18 per share, which translates to an annualized dividend of $0.72. At the current market price (≈ $2.80 / share as of the latest trading session), KPTI’s ** dividend yield is roughly 25‑30 %. By contrast, the three largest peers in the North‑American tissue/consumer‑paper space—Kimberly‑Clark (KMB), Georgia‑Pacific (GP) and International Paper (IP)—are all trading at double‑digit price multiples and pay modest, stable payouts that yield 3‑5 % (KMB ≈ 3.4 %, GP ≈ 4.2 %, IP ≈ 4.8 %). In short, KPTI’s yield is 5‑8 times higher than the sector average.
Trading Implications
- Fundamental outlook: The outsized yield likely reflects a low‑price, high‑risk profile rather than a sustainable income stream. KPTI’s earnings are modest and the company’s cash‑flow coverage of the dividend is thin; the payout ratio is well above 100 % based on its latest earnings, suggesting the dividend could be cut or suspended if earnings deteriorate.
- Technical picture: KPTI is trading near a strong support zone around $2.60 with a modest upward bias on the daily chart (50‑day SMA slightly above the 200‑day SMA). Volume has been picking up on each upward bounce, indicating some short‑term buying interest, but the relative strength index (RSI) is in the 70‑80 range, signaling over‑bought conditions and a potential pull‑back.
- Actionable insight: For income‑oriented investors, KPTI offers a high‑yield “catch‑up” opportunity, but the yield comes with significant risk. A prudent strategy would be to take a small, hedged position (e.g., 5‑10 % of a sector allocation) with a tight stop‑loss just below the $2.45 support and target a modest 5‑8 % upside as the stock rallies toward the $3.10‑$3.30 resistance zone. If the dividend is reduced in upcoming earnings, the stock is likely to re‑price lower and the yield will normalize, making it a potential short‑term trade rather than a long‑term income play.
Bottom line: KPTI’s dividend yield is dramatically higher than its peers, but the premium is largely a price‑compression effect. Investors should weigh the high yield against the company’s thin cash cushion and the technical risk of a near‑term correction. A cautious, short‑term bias with disciplined risk controls is the most prudent approach.