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The post A Closer Look At Marks and Spencer Group plc appeared first on The Motley Fool UK.

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Neither Jill nor Nate own shares in M&S.

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Neither Nate nor Jill own shares in ASOS.

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Neither Nate nor Jill own shares in any of the companies mentioned.

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Neither Nate nor Jill own shares in any of the companies mentioned.

That’s because it’s a well-run company with a history of strong performance and big dividend payouts, and I think it could be a great foundational share for your ISA. (One of the many reasons I own shares myself!)

Unilever started doing business more than 100 years ago, but today it’s a global giant in the consumer goods industry with 15 separate food, home care and personal care brands each posting sales of €1 billion or more.

From an investing perspective, Unilever is a pure consumer staples play. Just check your cupboards and you’re likely to see many Unilever brands, whether it’s Dove, Lipton, Knorr or Lifebuoy.

What you’re buying

Buying shares in Unilever today is buying into the company’s ability to leverage brand loyalty and keep stocking the shelves of people worldwide.

I think this is a wise move, because I see Unilever at its core as a strong business that is only getting stronger.

Emerging markets are a big part of the Unilever story, too. And despite a tough environment right now (and I believe this too shall pass), Unilever is innovating new products and using its operational expertise to wisely manage and scale its global operations.

The company drives 56% of its sales from emerging markets. That’s well above average compared to Unilever’s peers, and I expect the company to keep making the most of its 50 years or more of operations in India, China, Indonesia, Brazil and other emerging markets.

Get paid back

When you’re stocking up your ISA this year, why not look for stable businesses that can grow — and pay you an income just for owning them!

Right now Unilever is paying a 3.6% dividend, which is nearly 30% higher than the FTSE 100 average. And Unilever’s payout is covered 1.5 times by the its free cash flow, making it a pretty safe and reliable payout for shareholders.

Unilever has increased its dividend payout every year for more than 20 years, and it’s done this while retaining strong free cash flow — making it one of the more attractive dividend-payers out there.

What’s it worth?

Unilever’s share price has fallen by around 15% from last year’s peaks, meaning opportunistic long-term investors could be looking at a great time to buy in.

Unilever’s shares still trade at a lofty P/E of 18 times 2014 forecast earnings, which is ahead of the FTSE average of 14.8 times forecast earnings.

But I think you should look at Unilever as a long-term play. There could be some short-term pain as emerging markets slump, but Unilever is a consumer staples stalwart with a history of strong performance — and reliable dividends — to keep shareholders happy.

The post Why Unilever plc Is a Top ISA Buy appeared first on The Motley Fool UK.

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The Motley Fool and Jill own shares in Unilever.

One easy way to do this is to seek out and buy a piece of some of the world’s greatest companies and brands, and today I’ll profile Diageo (LSE: DGE) (NYSE: DEO.US), a share that ticks all the boxes for me and could be a great candidate for your ISA this year.

A case of drinks

It usually takes decades to build brands that dominate their markets, so when you have an already entrenched player like Diageo that has the scale to keep expanding, I think that’s a company worth owning for the long haul.


Diageo is the world’s largest spirits company, selling into 180 countries and with a huge range of spirits brands, including six of the world’s 20 biggest sellers. It’s tickling the taste buds of drinkers worldwide with popular brands Smirnoff, Johnnie Walker, Bailey’s and Crown Royal, each of which is the world’s best-selling brand in its category. Diageo also owns Guinness, the world’s best-selling stout.

Diageo’s management is investing heavily in its ‘superbrands’ — those that it sees as its core growth drivers.

The company is also investing heavily in its supply chain and emerging markets, especially in Africa. Diageo’s biggest brands carry global weight, and their aspirational positioning has made them hot in emerging economies with growing middle classes.

The numbers, please

Diageo’s stable of premium brands and worldwide distribution network rakes in more than USD$18 billion in sales each year. Because of Diageo’s impressive sales and unmatched scale, the company is able to clock an impressive 62% gross margin.

But those margins don’t come cheap: To maintain the brand loyalty that makes Diageo’s pricing power possible, the company spends about 16% of its sales on marketing each year. That’s a lot of money, but it is well spent to maintain and expand Diageo’s moat.

Most recently, the global drinks giant reported that sales were up 2% overall, driven by a near-5% increase in North American and a recovering Western Europe market.

But perhaps the more exciting long-term play here is Diageo’s growth in emerging markets.

Diageo already derives about 42% of its operating profit from Africa, Eastern Europe, Turkey, Latin America, the Caribbean and the Asia Pacific, making such emerging markets important to the company.

And although growth in emerging markets has slowed for many companies — including Diageo — I expect this will not be a factor long term. Because I think Diageo will continue to use its size to expand wisely into population-dense areas as their economies emerge and mature.

Diageo’s dividends

Another great case for owning Diageo is that is pays a nice dividend.

If we assume Diageo’s share price does nothing for the next 10 or even 20 years, you’re still looking at a 2.9% dividend yield. Name one bank that can match that.

Analysts expect the dividend payout to rise to 51.4p per share in 2014, and 56.3p for 2015.

Diageo has delivered good dividend growth over the past five years, and the rate of growth has accelerated about 6-7% year on year.

In addition to the hefty dividend it pays out with the cash flow that its booze sales generate, the company likes to buy up brands that are popular in their local markets. Its recent acquisition of Brazil-based Ypióca, the second-largest brand of cachaça liquor in the world by value, is a good example.


The £11,520 question

Any investment in Diageo today is therefore an investment in the company’s biggest brands — and its ability to keep selling them to more people, in more countries.

But with a new allowance of £11,760 coming our way in April, and with many of us still left with some of this year’s allowance yet to be used, it’s a great time to be thinking about how to add good quality shares like Diageo to our ISAs.

I believe Diageo, with its warehouse of superbrands and truly global business, is a great long-term investment for ISA investors.

The post Why Diageo plc Is A Top ISA Buy appeared first on The Motley Fool UK.

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The Motley Fool and Jill do not own any shares mentioned in this article.

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> Neither Jill nor Nate own shares in British American Tobacco.

For the 52 weeks ending 29th December, 2013, the pizza franchiser reported profit before tax (including tough conditions in Germany and Switzerland) of £47.6 million, which is up just 1.9% year over year. Excluding Germany and Switzerland, where Domino’s is deploying an expensive expansion plan yet to be proven in, pre-tax profits were up 11.6% to £55.2 million.

Domino’s said it opened 57 stores (down from 69 in 2012) and closed just 4 in 2013, bringing its grand total to 858 stores across four countries. These stores — and Domino’s strong online business — contributed to a 14% increase in sales to £668 million.

Like-for-like sales — or sales driven from stores that have been open at least a year — were up 7% in the UK, a good sign of growth in Domino’s core UK market.

Looking purely at online sales, which account for a hug 62% of its business in the UK, Domino’s said it saw a 28.2% increase to £338 million. A record 31% of online orders were taken through a mobile device, an important growth area for the business.

Commenting on the results, interim Chief Executive Officer David Wild said:

“It’s been another strong year for Domino’s and I am particularly delighted by the sales performance in our core UK business, which has continued into 2014, confirming the strength of our offer for both new and existing customers. The recovery in the Republic of Ireland is also pleasing. Whilst we have learnt some hard lessons in Germany, we now have a clear way forward and must focus on the delivery of this change in direction.

“We sold 65.5 million pizzas across the Group during the year and created over 1,500 jobs, which is no mean feat.”

For investors following Domino’s for the dividend, there is good news: the firm said the final dividend increased 11.4% to 8.80p per share (2012: 7.90p), bringing the total dividend for the year to 15.90p per share (which is up 9.7% from 2012).

Domino’s is showing positive signs of growth in its core UK business, but it continues to spend money trying to gain traction elsewhere. For investors, Domino’s Pizza’s franchise model means that store growth tends to translate nicely into even greater cash flow growth.

The post Domino’s Pizza Group Plc Dominates UK But Struggles To Deliver In Germany appeared first on The Motley Fool UK.

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> Jill Ralph does not own shares of any company mentioned. The Motley Fool has recommended shares in Domino's.

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> Neither Nate nor Jill own shares in BAE Systems.

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> Neither Jill nor Nate own shares in Rolls-Royce.