The Motley Fool

Buy-to-let is dying! This FTSE 100 dividend stock is a much better investment, in my opinion

Latest data on the health of the buy-to-let mortgage market wouldn’t have surprised anyone, I feel confident enough to say.

Monthly mortgage data from UK Finance has shown a steady downtrend in loans demand from landlords over the past year or so, and numbers released this week for March didn’t buck the trend. According to the trade association, there were 5,000 buy-to-let mortgages completed last month for purchase purposes, down 9.1% year-on-year.

UK Finance commented: “Buy-to-let house purchase activity continues to contract due to tax and regulatory changes,” revisions that we at The Motley Fool believe have gutted the buy-to-let sector as an attractive investment class and its ability to generate abundant returns.

In this instance, I think individuals really are better off following the herd and avoiding the buy-to-let market right now. In fact, I think better use for your money would be to buy up some big-paying dividend stocks, starting with the FTSE 100 favourite described here.

Solid as a rock

Now yields at Unilever (LSE: ULVR) may fall short of those boasted by many of Britain’s blue-chips, but that’s not to say they’re not much to shout about. For 2019 and 2020 these sit at 3% and 3.3% respectively, figures that surge past current rates of inflation in the UK.

As I say, there are plenty of shares on the Footsie with bigger dividends. For those seeking strong and sustained annual payout growth in the long term though, Unilever has few rivals, in my opinion. That’s due to its diversified range of much-loved consumer products and broad geographic footprint which allow earnings to grow pretty much each and every year.

Brand power

Indeed, the intense popularity of its brands with shoppers all over the globe gives it the profits visibility that’s so essential for any firm to relentlessly raise the annual dividend. And a recent report from Kantar Worldpanel illustrated just how immense the pulling power of Unilever’s goods are.

In its Brand Footprint 2019 report, the research house analysed 2,100 brands in 49 countries, a total territory which includes almost three-quarters of the global population. What Kantar found was that out of the top 25 most popular brands on the planet, eight of these are owned by Unilever, giving the Footsie company a greater number of labels on the list than any other fast-moving consumer goods (FMCG) producer.

What’s more, three of the company’s brands occupied the top 10 list this year too. Its Lifebuoy soaps remained unmoved year-on-year in fourth place, while its Dove-branded goods improved three places from 2017 levels to rise to eighth, and its Sunsilk shampoos climbed one position to ninth.

It’s not a shock that City analysts are confident earnings at Unilever will keep rising at a healthy rate (by 7% in  2019 and 10% in 2020), and that dividends will keep rising as well. In fact, it’s this dependability which encouraged me to buy the Footsie firm myself last year, and I expect it to generate me some delicious returns long into the future.

Five Income Stocks For Retirement

Our top analysts have highlighted five shares in the FTSE 100 in our special free report "5 Shares To Retire On". To find out the names of the shares and the reasons behind their inclusion, simply click here to view it right away!

Royston Wild owns shares of Unilever. The Motley Fool UK owns shares of and has recommended Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.