Recent Buy – Unilever ($UNA)

unilever-logo

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. 

About Unilever

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 MarketwatchUnilever 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.

Conclusion

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.

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14 thoughts on “Recent Buy – Unilever ($UNA)

    • I believe Unilever is one of those companies where it’s difficult to get your hands on when (far) under fair value. Especially now, the stock price looks very attractive.

      Thanks for stopping by.

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  1. Unilever is a great company, I also hold some shares. Current levels are very attractive for long term investors, I’ll definitely add more to my holdings in the future.
    Which broker do you guys use? I just changed this month from my bank to Lynx. Don’t want to make any quick conclusion but so far so good. I’ll write a review about it after a few month of using, but if you need some info meanwhile just drop me a message!

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    • I agree! We wanted Unilever to be part of our portfolio since we started out 2 years ago, and it finally is today.

      We currently use Rabobank to hold our investments, but are in the process of transfering to Binck. I’m not that familiar with Lynx, but it looks a bit similar to DeGiro? Correct me if I’m wrong here. The one thing I’m a bit wary about with the cheaper brokers is the different kind of costs that apply. Like paying a fee for owning ADR listed companies. But I’m interested in how your experience is, maybe we can pick up a few things 🙂

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      • I was with ABN (actually my pre-November portfolio is still there as ABN would charge a fortune to transfer out those assets). Lynx is not a budget broker like DeGiro (I heard some negative feedbacks about them), they are linked to Interactive Brokers. Their fees are slightly higher (e.g. USD 5 for American stocks), but I haven’t met with hidden charges so far. On their website there’s also some comparison charts between their fee structure and other brokers (including Brinck). They also have a promotion until the end of November.
        I don’t want to talk you off from Brinck though, I don’t have any experience with them and so far also only limited one with Lynx.

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      • We checked out DeGiro earlier this year, but is not something we want to try out. So it’s good to hear it is not comparable. Your story definitely changes the perspective 🙂 Think we have to dive in a bit further to really check whats it all about.

        We still have to get an offer for transferring the funds to Binck, so hopefully it’s not as bad as you have experienced with ABN. Depending on what they charge, we will decide what the next steps will be.

        Thanks for sharing!

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  2. I think Unilever is a great buy. I am big fans of consumer staples. I’ve been watching Church and Dwight for awhile and thinking I might jump in the next couple of weeks depending on my cash flow is going. Thanks for sharing!!!

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  3. I freaking love consumer staple companies. Thanks for bringing Unilever back onto my radar. I am very jealous of this addition to your portfolio! There are some gems out there and I’m looking to capitalize as well.

    Bert

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  4. Nice buy!
    I own some Unilever stocks as well. I love its products, as a consumer and investor 😊 Strong brand, broad economic moat, attractive fundamentals and several catalysts for future growth. Unilever also offers DRIPS which can easily make such an investment a compounding machine.
    Thanks for sharing.
    Cheers

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    • Thanks! It really is a wonderful company. I’m glad that due the recent price fall we could buy some shares for reasonable price.

      About the DRIP, we tend to pay out all our cash dividend. We have to trade with a third party and pay additional costs, so it seems there isn’t a lot of added value for us.

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  5. I think UL is a great buy, with its portfolio of high-quality products it will always have a lot of customers around the world. We would be shareholders if there weren’t so many companies in Australia we wanted to buy first 🙂

    Tristan

    Like

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