Everlasting love! A FTSE 100 dividend growth stock I’ll never leave

Looking for a life partner? Royston Wild talks about a FTSE 100 dividend stock he thinks you should definitely ‘swipe right’ on.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Unilever’s (LSE: ULVR) a terrific dividend stock I own and would never consider selling. Not even for a second. News flow might have been encouraging of late, but its long-term investment appeal remains undimmed.

The household goods manufacturer, like many within the fast-moving consumer goods (FMCG) segment, has just warned that the tragic coronavirus breakout could have a serious impact on trading in the near term.

It recently said that “it’s too early to quantify” the potential impact on trading. But it commented that the outbreak will have a commercial impact. “About a fifth of our business in China is professional foodservice,” it noted, adding that this is “likely to be significantly impacted by a drop in out-of-home consumption.”

It’s no wonder that Unilever’s share price has trended lower this week on signs of growing infection rates in China.

More bad news

Concerns over the coronavirus aren’t the only reason why the FTSE 100 firm has spooked investors of late, though. In late January’s full-year financials, Unilever reported weaker-than-expected fourth-quarter sales, a period when underlying revenues rose 1.5%. This means annual sales growth for 2019 came in at 2.9%, a shade short of its 3% to 5% target.

Moreover, Unilever said that this weakness looks set to persist. Underlying sales growth should fall below 3% again in the first quarter of 2020, it said. It expects the pace to pick up thereafter though and revenues growth for the full calendar year is predicted to be “in the lower half” of its multi-year target (of 3% to 5%).

Clearly, things could be better at the ice cream, washing detergent, deodorant, tea and shampoo manufacturer. But that full-year release still underlines why I believe Unilever is the ultimate ‘stress-free’ stock. However difficult trading conditions are, as a rule, sales and profits continue chugging higher year after year.

Brand power

There are a number of reasons for this. When you think of ice cream you think of Magnum and Ben & Jerry’s, Dove and Radox when it comes to personal care products like shower gels. The same with Hellmann’s and mayonnaise, Domestos and bleach, Colman’s and mustard.

These are brands whose connection with the global public is so strong that sales can be relied on to rise despite broader weakness in consumer spending. Unilever can be confident in raising prices without taking a significant hit to volumes too.

That list also reveals another formidable weapon in the company’s arsenal: diversification. It offers a broad category of products to protect group earnings should one or two categories struggle (like it is currently experiencing with tea). Unilever’s exceptional geographical diversification also insulates it from weakness in individual territories too.

A dividend hero

This brilliant earnings visibility gives Unilever the confidence to keep raising annual dividends. Payouts have risen by an average of 8% a year for almost four decades with no reductions in that time either. Even in times of rare profits, weakness in the company’s colossal cash flows can be relied upon to keep dividends rising. And City brokers expect this growth trend to continue over the medium term at least.

There are bigger yields than Unilever’s readings of 3.3% and 3.5% for 2020 and 2021, sure. However, few other Footsie stocks have the sort of robustness and therefore long-term profits security as this one. I don’t expect my love affair with this blue-chip to ever end.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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.

More on Investing Articles

Young Black man sat in front of laptop while wearing headphones
Investing Articles

Investing just £10 a day in UK stocks could bag me a passive income stream of £267 a week!

This Fool explains how investing in UK stocks rather than buying a couple of takeaway coffees a day could help…

Read more »

Investing Articles

A cheap stock to consider buying as the FTSE 100 hits all-time highs

Roland Head explains why the FTSE 100 probably isn’t expensive and highlights a cheap dividend share to consider buying today.

Read more »

Investing Articles

If I were retiring tomorrow, I’d snap up these 3 passive income stocks!

Our writer was recently asked which passive income stocks she’d be happy to buy if she were to retire tomorrow.…

Read more »

Investing Articles

As the FTSE 100 hits an all-time high, are the days of cheap shares coming to an end?

The signs suggest that confidence and optimism are finally getting the FTSE 100 back on track, as the index hits…

Read more »

Investing Articles

Which FTSE 100 stocks could benefit after the UK’s premier index reaches all-time highs?

As the FTSE 100 hit all-time highs yesterday, our writer details which stocks could be primed to climb upwards.

Read more »

Investing Articles

Down massively in 2024 so far, is there worse to come for Tesla stock?

Tesla stock has been been stuck in reverse gear. Will the latest earnings announcement see the share price continue to…

Read more »

Young Caucasian woman with pink her studying from her laptop screen
Dividend Shares

These 2 dividend stocks are getting way too cheap

Jon Smith looks at different financial metrics to prove that some dividend stocks are undervalued at the moment and could…

Read more »

Investing Articles

Is the JD Sports share price set to explode?

Christopher Ruane considers why the JD Sports share price has done little over the past five years, even though sales…

Read more »