3 Reasons Kimberly-Clark Should Hold An Essential Place In Your Portfolio Regardless of Earnings KMB stock is down 18% in the last eight months. However the company finds itself in a sweet spot where demand on the commercial and professional side should kick in even if consumer demand declines. That should help mitigate some of the added costs. Plus, you're investing in a company that provides a strong, reliable dividend.

Because Kimberly- Clark (NYSE:KMB) was a pandemic winner, its 2021 earnings will have to be viewed through that lens. What I mean is that the company is expected to post earnings that will be a slight decline from the same quarter in 2020.

Specifically, analysts are forecasting earnings per share (EPS) of $1.92 on revenue of $4.94 billion. That compares to an EPS of $2.13 and revenue of $5 billion in the first quarter of 2020.

Normally a year-over-year decline is reason for investors to be concerned. And looking at things completely objectively, the nation was well into the first quarter of 2020 before the store shelves got depleted.

However, it still is worth noting that the company's 2021 results will be compared to a year in which earnings per share jumped by 14%.

And if you compare the analysts forecast to the company's prior quarter, Kimberly Clark beats on the top and bottom lines. If you want to pull back to the first quarter of 2019 the company also delivers a comfortable beat for both revenue and earnings.

First the bad news

Of course, data will show you anything if you look at it hard enough. A salient fact for investors is that KMB stock is down 18% in the last eight months. And there's a reason for that. The company has faced increasing manufacturing costs, and continues to suggest it will have higher commodity-related costs throughout 2021.

But here again, it's worth mentioning while the company did endure a pullback in earnings in the last two quarters of the year, it still saw an EPS gain of over 14% in 2020.

In my opinion, there are three reasons that make this an excellent time for investors to buy into the stock.

Old Habits Will Stay in Place

Analysts are expecting consumers to continue the deep cleaning rituals they undertook during the pandemic. In late 2020, a survey by the research firm Mintel, cited that "26% of U.S. consumers who use household surface cleaners say they will go back to their typical cleaning routine when the pandemic is over or controlled."

One reason for this is that many consumers will still be receiving notifications from their surroundings of the importance of proper hygiene. As office building, bars, restaurants, and other public venues open, there will likely be more signs reminding patrons to wash and sanitize their hands. Some businesses may continue to require face coverings.

This is a catalyst for Kimberly-Clark because it sells items like facial tissues, soaps, and sanitizers. And now the company will likely start seeing demand on the commercial side which has largely been absent during the pandemic.

Medical Spending Will Resume

Kimberly-Clark sells personal protective equipment (PPE) through its Professional division. This includes products for cleanroom environments, lab environments, and sterilization wraps. The demand for these products is likely to remain strong.

This is because in the early stages of the pandemic, the amount of elective surgical procedures plummeted. And in many states, hospitals and medical centers are still working through a backlog of surgeries.

The Dividend Remains Solid

I've given you two reasons why you might capture a little stock price growth with KMB stock. But this has always been a dividend stock. And it continues to be a strong stock for income-minded investors. In January 2021, the company increased its dividend by 7 cents. That makes it 10 straight years of increasing its dividend payout which now sits at $4.56 annually.

Kimberly-Clark also has three-year dividend growth of 10.42%. And the dividend is well-covered as it is only 44% of cash flow.

The Bottom Line on KMB Stock

Analysts widely view Kimberly-Clark as being fully valued at its current price. However the company finds itself in a sweet spot where demand on the commercial and professional side should kick in even if consumer demand declines. That should help mitigate some of the added costs. Plus, you're investing in a company that provides a strong, reliable dividend.

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