Unilever
Unilever (LSE: ULVR) (NYSE: UL.US) is the company behind some of the top brands in food and domestic products. Manufacturing in large volumes brings significant economies of scale. The strong margins mean that Unilever can spend huge amounts advertising its products.
After a large cut in 2009, Unilever’s dividend soon recovered. On average in the last five years, the payout has been increased at a rate of 5.3% a year.
Earnings are expected to increase this year and next, with dividend growth picking up, too. The shares are available today at 16.9 times forecasts for 2014, with a prospective yield of 3.8%.
Diageo
Drinks group Diageo (LSE: DGE)(NYSE: DEO.US) is famous for its Guinness, Smirnoff and Bailey’s brands. It leverages this to demand higher prices from its customers. Diageo’s heritage helps to secure its profits for decades into the future.
Diageo has upped its dividend in each of the last five years by an average of 6.7% a year. Earnings growth has outstripped this, increasing by an average of 10.3% a year.
EPS for 2015 is expected to be 30% higher than it was for the 2013 financial year. Dividends are expected to be 20% higher by then.
This puts the shares on a prospective P/E of 16 for 2015, with an anticipated yield of 2.8%. That’s not cheap but top companies rarely are.
Compass Group
Compass Group (LSE: CPG) is a leading supplier of outsourced catering and facilities management services. The company makes nearly half of its sales in North America and is enjoying strong growth in Australia, Turkey and Brazil.
The size and quality of Compass’ customer base brings a high degree of reliability to its profits.
Dividends at Compass Group have increased at an average rate of 15.9% a year in the last five years. Smaller advances are expected for the next two years, rising ‘just’ 10.4% and 9.9% this year and next. EPS is expected to increase by 19% this year and 17% the next.
The shares today trade on a 2014 P/E of 16.9, with a prospective yield of 3.0%.
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> David does not own shares in any of the above companies. The Motley Fool has recommended shares in Unilever.
