It’s been a while since we bought anything. Due too some busy weeks we took our time investigating several companies. (And we had to wait until we had enough money.) Instead of buying little chunks every month, we save up a money until we can at least invest €2000 in one stock. We do this to save on transaction cost through out the year (and long term). So in our case, this means we make a buy around once every two months.
Our newest addition: 53 shares of Unilever N.V.
We actually had our eyes on AmerisourceBergen earlier. But when we wanted to make the buy, we found out it was not possible to buy with our bank. I know, it was the least we expected. And we’re already checking if switching broker might be better.
Moving on. Instead of $ABC, we turned our eyes on other companies. There were several sectors or companies that we were interested in. The health sector still provides lots of companies which are under fair value. Also everybody has seen the beating of Wells Fargo, which we happened to buy just before. Perfect opportunity to average down here. But we also liked how a few companies in the consumer staples industry were priced right now. And 1 in particular: Unilever. Their stock price was coming down steadily the last weeks. Other bloggers, like Cheesy Finance, also picked up on this trend.
Besides, we happen to have a lot of focus on US stocks lately. As being Dutch, we like to have a mix of US stocks and European stocks in our portfolio. And besides Shell, Unilever is one of the better Dutch stocks for dividend growth investors. So when it hit below the 38 euro, we knew now was our time.
Therefore, on last monday we bought 53 shares of $UNA for €37.83 a share and with a total worth of €2004.99. The price may be different for some of you, but this is because we bought the stock at the AEX instead of ADR.
Unilever is a consumer defensive company operating worldwide and having famous brands in their product portfolio. Like Dove, Hellman’s, Knorr, Lipton, Rexona and many, many more.
Their business is quite established in western markets, whereas there is still a large growth opportunity in emerging markets.
From Morningstar: Unilever PLC is a supplier of fast moving consumer goods. Its areas of operations are Personal Care, Home Care, Foods and Refreshment.
From Marketwatch: Unilever has mammoth brands including Lipton teas and Dove soaps that will prove recession-proof (if it comes to the “R” word). It’s a true multinational with operations in 190 countries and sales at home in Europe as well as in the U.S. and (increasingly) in emerging markets.
What we like about this company
First off, we like the dividend. As DGI’s we focus on dividend growth, but really like a solid yield as well. With Unilever, we found a yield of 3.3%. Which is way higher than most dividend champions. (Did I mention UNA being a champion? Well, uhm it isn’t)
Unilever has been paying dividends only since 2009. Over the past 5 years their dividend has grown with an average of 7.3%, and the last increase was a decent 6%. Their pay out ratio is, with 70%, a bit on the high side. However the free cash flow per share is 2,29. So compared to this metric, the pay out ratio would be only 55%.
Secondly, we like the stability of the company. This stock is perfect to fit a basis DGI portfolio. They operate globally and are constantly looking for innovations (mostly on durability) or reinforcing their core business and therefore increasing their earnings.
Basically, it’s a somewhat slower growing company with a high yielding dividend which fits perfectly in a portfolio that has lots and lots of time to grow in the future.
So with $UNA on board, we have gained a solid and steady European dividend payer with lots of room to grow on in the future. We were able to pick up some shares for a very fair price. And with a solid dividend yield of 3.3% we are looking at a portfolio dividend increase of €67.84 (before taxes).
With this addition we also balanced out our portfolio a bit, while we have build up a large exposure to US stocks this year already. And expanded our position in consumer defensive companies.
What do you think of Unilever? Made any recent buys yourself, currently watching something? Or are you waiting out for other opportunities? Let us know in the comments.