Kimberly Clark (KMB -1.52%) sells products under globally recognized brands that many people use in their everyday lives. These include diapers, baby wipes, toilet paper, tissues, and paper towels that it sells under brands like Huggies, Pull-Ups, Depend, Kleenex, and Scott. While the pandemic boosted sales for some of the company's consumer products -- notably its consumer tissue segment -- the division that sells goods to businesses was hurt by the virus and subsequent economic softness.

Unfortunately, recent news, including the U.S. president's recent diagnosis and cases cropping up in other places, shows that COVID-19 is not past us. These uncertain days makes it a good time to evaluate Kimberly Clark's prospects and whether you should entertain putting your hard-earned money into purchasing the shares.

A finger on a button that says buy.

Image source: Getty Images.

Breaking it down

Kimberly Clark sells these products under three businesses. The personal care and consumer tissue segments peddle their wares to retailers aimed at individuals. K-C professional offers products such as tissues, towels, soaps, and sanitizers to commercial enterprises.

The good news is that personal care and consumer tissue account for more than 80% of the company's sales. These have stable demand, regardless of the economy. People aren't going to buy fewer diapers or tissues just because their economic fortunes have hit a rough patch, because they need these items.

In the second quarter, the company's adjusted sales, which exclude foreign-currency translations, rose by 4% versus a year ago. The consumer tissue segment was particularly strong, growing by 14%, due to the pandemic boosting demand, while the personal-care business saw a 2% increase. These are both steady businesses, however.

Its unit that sells to businesses experienced a 10% sales decline. This segment will likely continue to face tough sledding, but it's less than 20% of Kimberly Clark's sales. However, while it may take a while, once businesses reopen and workers go back to the office, this will undoubtedly rebound.

Consistency pays off

Management feels comfortable enough to reinstate guidance after withdrawing its outlook in April amid the pandemic. It expects Kimberly Clark's 2020 adjusted sales to increase by 4% to 5%, and adjusted operating income to rise by 6% to 9%. This compares to 2019's 4% sales growth and the 5% increase in operating income, both on a non-GAAP basis.

The steady top-line growth is nice for shareholders, who don't have to live with fluctuating revenue. This is flowing to the company's bottom line, which is benefiting from cost-reductions programs that have been lowering expenses, including over $500 million this year.

Its decision to restart repurchasing shares after suspending the activity earlier this year reflects management's confidence and consistent results. This has typically been a good use of cash. Last year, Kimberly Clark spent $800 million, paying an average price of around $129, more than 10% below the current share price.

Shareholders can also expect higher dividends. Kimberly Clark is already a Dividend Aristocrat, and the board of directors raised the payment earlier this year, bringing its streak to 48 years. That means the company is only a couple of years away from becoming a Dividend King, which is an S&P 500 company that has raised payments for at least 50 straight years. Steady gains and higher dividends have allowed Kimberly Clark's total return to trounce the S&P 500 index.

With steady demand for its products, well-recognized brands with strong reputations, and a push toward faster-growing products, Kimberly Clark looks like a stock to put on your buy list.