When I joined this site as a staff writer in January 2003, I discovered that Fools held monthly social meetings at a nearby pub. Keen to discuss my favourite FTSE 100 shares, I started attending these events.
At one meeting in early 2003, I had a profound, almost life-changing, experience. I met a distinguished American gentlemen – immaculately dressed, with impeccable manners and a delightful Southern drawl. This gentlemen taught me a crucial lesson about building wealth long-term by buying quality stocks.
He explained that, just as he finished college, his father died. In his estate, father left son a stock portfolio worth perhaps $20,000 (in the late 50s or so). This sum was invested in “big, boring, blue-chip stocks”, according to the distinguished gentlemen.
Throughout his life, investment advisers had urged this charming character to sell his solid, old-school shares and buy into the next big thing. He ignored them, stuck with his established portfolio and kept adding these same stocks.
Finishing with a flourish and a loud laugh, the gentlemen roared at me: “And you know how much those boring S&P 500 shares are worth today, Cliff? EIGHT MILLION DOLLARS!”
Unilever: A FTSE 100 winner for decades
When I scan the FTSE 100 looking for attractive businesses for portfolios, one name keeps coming up. This company’s shares aren’t insanely cheap, they don’t pay a double-digit dividend, and they don’t take giant leaps in value.
All the same, I’d happily buy shares in Unilever (LSE: ULVR) at almost any price, largely because it ticks all my boxes as a continuing FTSE 100 success story. For example:
- As a £113bn powerhouse, Unilever is one of the largest listed companies in the FTSE 100 and in Europe.
- It’s run by an outstanding Anglo-Dutch management team that thinks long term and acts accordingly, just as FTSE 100 managers should.
- It has an unrivalled array of popular, best-selling brands in food and drink, home care, and personal care. It’s highly likely that your kitchen and bathroom cupboards contain Unilever products.
- Unilever has an impeccable pedigree, with a history dating back to September 1929 (just before the Great Depression hit).
- It has a rock-solid balance sheet and a strong cash/liquidity position to ride out further Covid-19 waves and emerge victorious.
A wonderful FTSE 100 company at a fair price
Billionaire investing legend Warren Buffett argues that, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price”.
For me, Unilever fits the bill 100% at the current share price of 4,358p, and is a FTSE 100 favourite of mine. The firm’s yearly cash dividend of 143.44p per share was covered 1.33 times by earnings per share of 191p. The current dividend yield is a decent 3.3% and these shares trade at 22.8 times earnings.
In summary, Unilever shares may appear expensive but, for me, this is definitely a fair price to buy into a wonderful FTSE 100 company.
With global markets in turmoil as the coronavirus pandemic tightens its grip, turning to shares to generate income isn’t as simple as it used to be…
As the realities of ‘life under lockdown’ begin to bite, many of the stock market’s ‘go-to’ high-yielding companies have either taken an axe to their dividend pay-outs… or worse, opted to suspended them altogether – for the near-term at least.
With so many blue-chip and mid-cap companies scrambling to hoard cash right now, where are we income investors to turn for decent yields?
Fortunately, The Motley Fool is here to help…
Our analyst has unearthed what he believes could be a very attractive option for income- seeking investors – a company that, in his view, boasts a ‘reliably defensive’ business model, combined with a current forecast dividend yield of 4.2% to boot!*
But here’s the really exciting part…
This business even has form in riding out this kind of situation, too… having previously increased sales and profits back in 2008 and 2009 when the world was gripped in the deepest economic crisis since the Great Depression.
*Please be aware that dividends are variable and not guaranteed.
Cliffdarcy has no position in any of the shares mentioned. 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.