Shares of Kimberly-Clark (NYSE:KMB), the maker of paper-based products like Kleenex, Kotex, Cottonelle, and Huggies, have risen about 4% over the past 12 months as the COVID-19 crisis buoyed its sales.

Kimberly-Clark's organic sales, which rose 4% last year, surged 11% in the first quarter of 2020 as shoppers stocked up on its goods "across all major geographies." Yet Kimberly-Clark didn't provide a full-year outlook, so investors might be wondering if the stock will lose its luster as the panic shopping ends. Let's see if this consumer staples giant will remain a worthwhile investment over the next 12 months.

A woman holds out two rolls out toilet paper.

Image source: Getty Images.

Understanding Kimberly-Clark's business

Kimberly-Clark sells its products in over 175 countries and claims to provide essential products to nearly a quarter of the world's population.

It splits its business into three main segments: personal care products (48% of its revenue last quarter), which include feminine and baby care products; consumer tissue products (34%); and the K-C Professional segment (16%), which supplies its products to businesses.

Its revenue rose across all three categories last quarter, led by a 13% jump in consumer tissue sales. Shipment volumes and prices also improved across all three segments, indicating it still wields plenty of pricing power against brand-name rivals like Procter & Gamble (NYSE:PG) and generic competitors.

A disrupted turnaround plan

Back in 2018, Kimberly-Clark launched a restructuring plan to cut costs, divest its lower-margin brands, and invest in new growth initiatives. It originally expected to complete that plan by the end of 2020, but it now expects the COVID-19 crisis to postpone its completion to 2021.

It also warned its projected annual pre-tax savings from the plan ($500 million to $550 million) probably wouldn't be fully realized until 2022. That delay is disappointing, but the plan already lifted its operating margins over the past year:

KMB Operating Margin (TTM) Chart

Source: YCharts

Kimberly-Clark also suspended its stock buybacks last quarter to conserve cash, but it stated it would "further assess" the program later this year. It also issued two new long-term debt offerings, worth $500 million and $750 million, to shore up its liquidity.

On the bright side, Kimberly-Clark probably won't touch its dividend, which it's raised annually for over five decades. It spent just 76% of its free cash flow on its dividends over the past year, and it pays a forward yield of 3% -- which tops P&G's 2.6% yield and the S&P 500's average yield of 1.9%.

Should investors pay a premium for Kimberly-Clark?

The COVID-19 crisis, the ongoing U.S.-China trade war, widespread civil unrest, and other macro headwinds are all causing investors to pay premiums for defensive dividend stocks like Kimberly-Clark and P&G.

Yet analysts expect Kimberly-Clark's revenue to stay nearly flat this year as its earnings, buoyed by its restructuring plans, rise 9%. Those are low growth rates for a stock that trades at 20 times forward earnings and suggest its growth will fade as the panic shopping slows down.

However, the macro headwinds could still convince investors to retain their positions in safe-haven stocks. Since a second wave of COVID-19 infections could return in the fall, investors should keep paying a premium for Kimberly-Clark's stability and dividends -- instead of fretting over its near-term growth -- for the foreseeable future.

So where will Kimberly-Clark be in a year?

Kimberly-Clark's stock outperformed many stocks in pandemic-impacted sectors this year, but it actually underperformed the S&P 500 over the past 12 months, the past five years, and the past decade.

That isn't unusual since Kimberly-Clark generally only outperforms the market during steep downturns like the Great Recession. But it also suggests Kimberly-Clark will still underperform the market over the next year -- even though its dividend and diversified portfolio of evergreen products should set a firm floor under the stock.