Unilever Offers Shareholders 3%-Plus Dividend Yield (UL, UN)
By: Ned Piplovic,
Unilever, a transnational consumer goods company, currently has two publicly traded legal entities – Unilever N.V. (NYSE: UN) and Unilever PLC (NYSE: UL) – each currently offering a dividend yield in excess of 3%.
Over the last 20 years, Unilever N.V. has hiked its annual dividend 16 times. Unilever PLC’s record is more impressive, as it boasts 18 annual dividend boosts in that time, including for the past three consecutive years.
Both legal entities will distribute the next dividend payouts on the September 5, 2018, pay date to their respective shareholders of record before the August 2, 2018 ex-dividend dae.
Tracing its origins back to 1872, Unilever’s legal structure comprises two holding companies — Unilever N.V., which has its registered and head office in the Netherlands, and Unilever PLC, which has its registered office at Port Sunlight in the United Kingdom and its head office at Unilever House in London. While these two holding companies are legally separate entities with separate stock exchange listings, the two operate almost as a single economic entity. However, that will change soon.
In March 2018, the company announced that it intends to centralize the current operational management into the Rotterdam headquarters and eliminate the London head office, though brand management, research, support services and production operations in the United Kingdom will not be affected. Despite the transition toward becoming a single legal entity, Unilever intends to continue listing its shares on the London Stock Exchange, the Amsterdam Stock Exchange and the New York Stock Exchange.
Unilever currently operates through four business segments — Personal Care, Home Care, Foods and Refreshment . The Personal Care segment offers skincare, haircare, deodorant and oral care products through multiple brand names, including Axe, Dove, Lever 2000, Lux, TRESemmé, Vaseline and Dollar Shave Club. The Home Care segment provides home care products, such as powders, liquids, capsules, soap bars and various cleaning products under the Dirt is Good, Surf, Comfort, Domestos, Sunlight, Pureit, Blueair and Radiant brands. The Foods segment offers soups, sauces, snacks, mayonnaise, salad dressings, margarines and spreads under the Knorr, Hellmann’s, Bango, Maizena, Robertsons and Kissan brands. Lastly, the Refreshment segment offers ice cream and tea-based beverages under multiple brands, which include Magnum, Lipton, Ben & Jerry’s, Pure Leaf, Talenti and Breyers.
Unilever N.V. will pay the same $0.51 (GBP 0.3872) quarterly dividend that it did in the last period. This current dividend corresponds to a $2.04 annual dividend payout and a 3.6% dividend yield, which is more than 18% above the company’s own 3% average yield over the past five years. Additionally, this entity’s current dividend yield is more than double the 1.76% average yield of the overall Consumer Goods sector, almost 117% above the 1.64% average yield of the Processed & Packaged Goods industry segment and more than 18% higher then the 3.01% simple average yield of the segments only dividend-playing companies.
Unilever PLC’s upcoming $0.453 (GBP 0.3445) quarterly dividend payout is 3.1% above the previous period’s amount of $0.439 (GBP 0.3341). Over the past three years, Unilever PLC advanced its total annual dividend amount 40%, which corresponds to an average growth rate of 11.7% per year.
This new quarterly payout is equivalent to a $1.81 annualized distribution and a 3.2% dividend yield. While slightly lower than the Unilever N.V.’s 3.6% yield, the 3.2% yield is still 82% higher than the 1.76% average yield of the overall Consumer Goods sector and 96% above the 1.64% average yield of the Processed & Packaged Goods industry segment. Additionally, the Unilever PLC’s yield is also nearly 7% higher than the 3.01% simple average yield of only dividend-paying companies in the segment.
The share prices for both legal entities declined slightly in the first half of the trailing 12 months, but they have recovered completely since the beginning of March 2018 and currently trade at the same levels as they did one year earlier. On July 24, 2018, Unilever N.V. closed at $57.09, which was 0.9% lower than it was one year earlier and 41% higher than it was five years ago. Unilever PLC closed at $56.37 on the same day, and this price was just 0.2% lower than it was 12 months earlier, but 36% higher than it was five years ago.
While the share prices for both legal entities ended the trailing 12 months virtually flat, both entities delivered a total return of slightly more than 2% for the year. The total returns over the past three years were approximately 37% and the total returns exceeded 50% for both entities over the past five years.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.