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Unilever Dividend Stock Analysis

February 05, 2010 | About:
Unilever PLC, together with its subsidiaries, engages in the production and supply of fast moving consumer goods in food, home, and personal care product categories in Western Europe, the Americas, Asia, Africa, and Central and Eastern Europe. This international dividend achiever has raised dividends for over one decade.

This dividend stock pays dividends semi-annually. Another odd factor about it is the fact that it trades in the UK and the Netherlands. In this analysis I am concentrating on the British based, American Depositary Receipts. Unilever operates as a single business entity. However, there are two owners: Unilever (NV) and Unilever (PLC) are the two parent companies of the Unilever Group, having separate legal identities and separate stock exchange listings for their shares. You can find Unilever shares trading on NYSE as (UN) or (UL) representing NV and PLC respectively. (source)

The stock has delivered an average annual total return of 10.20% over the past decade.

UL.gif

Earnings per share have grown at an average pace of 12.10% per annum. Future growth in EPS would depend on how the company balances its pricing with the need for volume growth in its segments. For 2009, analysts expect the company to earn $2.01/share, which is lower than 2008’s EPS of $2.53. For 2010 analysts expect Unilever PLC to earn $2.21/share.

EPS.JPG

Annual dividends per share have increase by an average of 10.30% annually, which is lower than the growth in earnings. The reason why the dividend fluctuates is because it is typically translated from the British Pound to the US Dollar, and the exchange rate is fluctuating constantly. A 10% growth in dividends translates into the payment doubling every seven years.

DPS.JPG

The return on equity has fluctuated between a low of 13.50% in 2001 and a high of 58.40% in 2004. Over the past few years it has remained above 30%, which is impressive.

ROE.JPG

The dividend payout ratio has consistently remained above 50%, with the exception of 2000, 2001 and 2009.

DPR.JPG

Unilever (UL) currently trades at a P/E of 15.50 times 2009 earnings, has an adequately covered dividend, and yields 3.20. Overall Unilever (UL) does seem attractively valued at the moment.

I would definitely consider initiating a position in the stock when funds are available.

Full Disclosure: None

Dividend Growth Investor

http://www.dividendgrowthinvestor.com

Rating: 3.8/5 (5 votes)

Comments

mike5885
Mike5885 - 4 years ago
dividend is quarterly now
James Nyka
James Nyka - 4 years ago


...Another odd factor about it is; try Another FACT (not factor) about it is THE FACT that it trades in the...; drop THE FACT; try Another fact about it is that it trades...

...representing NV and PLC (COMMA), respectively

Annual dividends have increseD, not increase.

The REASON WHY the dividend fluctuates IS because....Kill the reason why and ...is. Try...The dividend fluctuates because...FOUR WORDS ARE BETTER THAN EIGHT. Avoid wordiness; it blurs your message.

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