Unilever is another top tier foundational stock in my portfolio, i love its ability to withstand hardships and pandemics thanks to its huge diversity in products and businesses across the globe. Its continuing to pay out dividend through the covid crises in a sustainable way and the company is well set to increase its cash flow for future growth.
Why I Love Unilever.
I love companies with big brand portfolios and the know how to manage their brands effectively. Unilever Owns over 29 active global brands and more interestingly over 169 active independent brands around the world.These brands are spread across different divisions including home care, food and refreshments and lastly beauty and personal care.
Unilever is a holdings company with many acquisition under its belt, it buys manages and sells brands around many different sectors, within many different industries over many different countries, this naturally gives it a layer of protection during hard times effecting individual industries or countries. If a portion of Unilever's portfolio falls, it can always re-balance and strengthen its other brands while making strategic decisions on what to do with the under performers. We can see this happening now with Unilever spinning off some of its Tea brands as a separate entity in order to push its own portfolio towards the younger generation.
Here we can see just a few of the brands Unilever has under its management.
In just this small snapshot containing 12 of its 169 active brands we can see a diversity over tea, food, snacks, body spray and cleaning products.
Unilever has been growing its cash flow consistently for many years alongside its dividend. In 2014 Unilever had a free cash flow value of €3608b, this has now grown to €7855b within 6 years. The company currently pays out around 73% of its earnings as a dividend. This is a considerable amount but considering Unilever is a mature company with solid brands that is continuing to grow and innovate i believe this will change. The company is continually looking for more opportunities to change, improve and acquire more brands and businesses. Only this year Unilever acquired the Horlicks brand, increasing its drinks portfolio and its opportunity to grow its cash flow to new levels.
Unilever pays out a dividend of 3.32% at the time of writing but has continued to grow its dividend for over 9 years so i expect future payouts to increase as long as Unilever can continue to grow its cash flow as it has done in the past. Given how strong Unilever's portfolio is and the fact it is able to sustain its dividend and remain relatively healthy through the covid crises, I consider the dividend from Unilever stronger when compared to a lot of other businesses.