World-famous essentials

Unilever (LSE:ULVR) sells personal care, home care, and packaged food items in almost all regions of the world.

It breaks down its product sales into five segments, which are as follows:

One element of the business which is incredibly compelling to me is that it is quite recession-resistant. Because it sells products that people generally consider essential, they are unlikely to cut them from their budgets when it comes time to tighten expenses.

That’s a very strong position for a business to be in, and it provides some security for shareholders during economic downturns.

Growing in price and highly profitable

Over the past 10 years, Unilever has grown in price by almost 53%. That’s great news because it ticks my box as potentially being able to protect my initial investment value.

But that’s not all I love about this opportunity. It’s also highly profitable, with a net income margin of almost 11%. That’s right at the top of its industry. Now, while that’s gone down recently, it’s still roughly at the level it has been usually over the past decade.

It’s the dividends I really like

It’s great that the market keeps pricing Unilever shares higher. But the dividends it pays out are what really interests me. Those payouts provide me with money in my pocket each year that I can use to help me pay my bills or spend on leisure.

With a dividend yield of almost 4% at the moment, I’m quite happy because I consider the shares to be relatively low risk. That’s much more appealing to me than a 10% yield from an investment where I’m worried all the time that the shares are going to drop in price. I value being able to sleep well at night more than anything.

The balance sheet is concerning

While the investment looks generally strong to me, one area that I don’t like so much is the balance sheet. As it’s got 76% of its assets proportioned by liabilities, that leaves me a bit concerned.

While its revenue is quite recession-resistant, there are still problems that could arise with supply chains in the case of a natural disaster or war, for example. If that happens, the balance sheet could get even worse, and it could struggle to grow for a while longer than if it had lower levels of debt.

Also, if it does face one of the situations where its revenues drop, it could easily cut the dividend. That’s why I always have to remember when investing to diversify my portfolio. That will help protect me from anything going wrong in one company.

I’m considering it

I think this could be one of the best British investments for me to generate a strong dividend income. However, I’m not investing in it just yet. Over the next year, I might consider it. However, I have a few other opportunities higher up on my watchlist first.

The post I think this might be one of the best investments for passive income appeared first on The Motley Fool UK.

It’s always best to compare firms’ new quarterly/half-year numbers to those from prior years. But certain revenue figures may have been impacted by the pandemic, so it’s important to get context from pre-pandemic levels too. It can also be useful to consider whether a company can perform better than its previous year’s numbers, or if it can beat analysts’ annual forecasts. Analysts in the UK don’t always publish earnings previews for quarterly or half-year periods, but given their popularity, the shares covered below are exceptions.

Lloyds (H1 Earnings)

Lloyds (LSE: LLOY) is one of Britain’s biggest financial institutions. Its brands include Lloyds itself, Halifax, and Bank of Scotland. It earns the bulk of its revenue from mortgage loans. The FTSE 100 bank is expected to post its half-year earnings for its six months performance ending June on 27 July. The company’s financial year ends in December.

The overall consensus is that Lloyds is expected to continue growing its top line from rising interest rates. That being said, its diluted EPS is expected to decrease for the half year and full year. This is most probably due to the increasing number of defaults and bad loan provisions. Investors will also be keeping an eye out for the remediation figure, number of late-stage loans, and free cash flow to determine whether the UK is entering a recession.

Shell (Q2 Trading Update)

Shell (LSE: SHEL) is a British multinational oil and gas company. It is one of the biggest oil and gas firms. And by revenue and profits, it’s one of the largest companies in the world. The giant is set to reveal its Q2 numbers for its three months performance ending June on 28 July. The company’s financial year ends in December.

The earnings preview seems to indicate a top and bottom line improvement to Shell’s business, as last year’s figures were still impacted by worldwide lockdowns. As global travel resumes, investors will be keeping an eye out for future guidance to determine whether analysts estimates can be met for the full year. If so, the Shell share price is expected to stay green for the foreseeable future.

Unilever (H1 Earnings)

Unilever (LSE: ULVR) is a consumer goods conglomerate producing food, condiments, ice cream, cleaning agents, beauty products, and personal care. Its brands include Lynx, Ben & Jerry’s, Dove, and many more. Unilever will be releasing its half-year earnings for its six months performance ending June on 26 July. The company’s financial year ends in December.

While revenue is expected to increase on a half-year and full-year basis, underlying EPS is expected to fall. This is most probably due to high inflation rates that are beginning to take a toll on a global scale, with higher costs impacting the producer’s operation expenditure. Nonetheless, a beat on both revenue and EPS estimates this week could see the Unilever share price push into the green for the year.

The post Earnings preview: Lloyds, Shell, Unilever appeared first on The Motley Fool UK.

And the FTSE 100 offers investors plenty of choice, from tobacco (British American and Imperial) to alcohol (Diageo) to household and personal goods powerhouses Unilever (LSE: ULVR) (NYSE: UL.US) and Reckitt Benckiser (LSE: RB).

Tobacco and alcohol companies may not be to everyone’s taste, but Unilever and Reckitt have almost universal appeal. However, could it pay investors to look beyond this popular blue-chip pair to smaller industry peers PZ Cussons (LSE: PZC) and McBride (LSE: MCB)?

Unilever and Reckitt Benckiser are truly global businesses, thoroughly diversified geographically, and own many worldwide brands and trusted local names. Both companies’ products are found in around 200 countries, and no single market impacts significantly.

PZ Cussons also owns a number of familiar brands, including Imperial Leather and Carex. The company operates internationally, but not on the breadth and scale of Unilever and Reckitt. For example, Cussons’s original homeland, Nigeria, is its largest single market, providing the majority of the 44% of group revenue that comes from Africa.

Cussons has struggled for significant growth in Nigeria in the face of headwinds over the last few years, and the company reported within its annual results today that “disruption in the north, the Ebola outbreak, presidential elections and a significant currency devaluation have all contributed to a very difficult operating environment”.

Elsewhere, Cussons’ Asia segment currently consists principally of four countries –Australia, New Zealand, Indonesia and Thailand — while the Europe segment is basically the UK, Poland and Greece.

McBride is similar to Cussons in that it operates internationally, but in a limited number of countries compared with the sweeping geographical reach of Unilever and Reckitt. And McBride is different from all three of its peers in that it is focused not on brands, but on private label products for supermarkets.

The UK is McBride’s largest single market at 35% of revenue, and this exposure, combined with fierce competition in the UK supermarket sector, has been impacting group performance. In it’s last annual results, the company said it had suffered as a result of “prolonged branded promotional activity within the UK”.

McBride has embarked on a major restructuring of the UK business, and at the latest half-year said that the scope for the group to benefit from lower costs would be “tempered by the extent to which Private Label can hold or grow volumes against branded promotions”.

The table below shows some key numbers for the four companies.

As you can see, Reckitt and Unilever have superior operating margins and returns on equity (ROE), reflecting their economies of scale, efficiency and the pricing power of their desirable brands.

Their shares have also performed well. However, that is less to do with earnings growth (which has been modest), and more to do with investor demand for these solid blue chips, which has driven their price-to-earnings (P/E) valuations up to what are now relatively high levels. As such, I see Reckitt and Unilever as “holds” at the current time, rather than “buys”.

What of Cussons and McBride? Well, dealing with McBride first, as you can see the operating margin is unimpressive and the ROE is lower than that of its peers. Furthermore, these efficiency measures have been trending down over the last five years. The numbers, together with McBride’s problems caused by branded promotional activities, only serve to emphasise the attractiveness of companies with powerful brands.

With its relatively low P/E and high yield, McBride may be worth a closer look for investors who are partial to restructuring recovery plays, but this low-margin business is not my idea of a buy-and-hold consumer goods stock.

Cussons, with its better margins, its brands and a decent enough ROE has more appeal. Being smaller than Reckitt and Unilever it has a lower base from which to grow, and the fact that it doesn’t have blanket geographical coverage means it can pick and choose which markets to expand into and when. Of course, Cussons has to make good decisions and execute on them, but growth opportunities are there. In time, expansion would reduce the influence of current largest market Nigeria and increasing economies of scale should feed through to rising margins and ROE.

Is Cussons a “buy” on a P/E of 19.5 and yield of 2.3%. Close, in my view, but I think I’d be looking for a dip in the shares.

The post Are PZ Cussons plc & McBride plc Better Value Than Unilever plc & Reckitt Benckiser Group Plc? appeared first on The Motley Fool UK.

Over the past 12 months Unilever’s shares have added 9.7%, Reckitt’s shares have jumped 18.8% and ARM has racked up gains of 22.9%. In comparison, the FTSE 100 has struggled to keep its head above water, only adding 0.6% excluding dividends over the same period. 

After these gains, it’s starting to look as if the shares of these three market leaders are overheating. Indeed, both Unilever and Reckitt are currently trading at or near all-time highs. Meanwhile, ARM is trading 15% below its all-time high of 1,200p reached at the end of March. 

Physiological barrier

There’s a certain physiological barrier that stops many investors buying a stock when it reaches an all-time high. However, sometimes you have to be prepared to pay a premium for quality, which is why Reckitt and Unilever still look attractive after recent gains. 

Reckitt currently trades at a forward P/E of 24.3 and offers a dividend yield of 2.1%. Unilever currently trades at a forward P/E of 21.7 and is set to yield 3.1% this year. As a value investor, usually I would be wary of such lofty valuations. P/E ratios in the mid-20s leave plenty of room for disappointment, and there’s no margin of safety. 

But Unilever and Reckitt are high-quality businesses, which produce a selection of essential everyday household items, the sales of which are easy to predict. Therefore, the businesses are defensive by nature, and there are unlikely to be any negative surprises on the horizon. 

Moreover, Unilever and Reckitt are both able to generate high returns on invested capital (ROIC). In fact, over the past ten years Unilever’s average annual ROIC has been in the region of 22%. Reckitt’s has come closer to 30% per annum. 

Track returns on capital

Over the long term, share prices tend to track returns on capital. For example, if a business earns 6% on capital over ten years, and you hold it for ten years your return will be around 6% per annum. Conversely, if a business earns 18% on capital per annum, you’re bound to end up with a fine result and outperform over the long term, no matter how much you pay in the first place. 

The same logic applies to ARM. Last year ARM produced an ROIC of just under 30%. This year City analysts expect the company’s ROIC to top 46%. What’s more, shareholder equity is expected to increase by 50% during the next two years. And with being the case, ARM deserves to trade at a large premium to the wider market. 

Indeed, ARM currently trades at a forward P/E of 32.5, around double the FTSE 100 average P/E of 15.

However, the company’s earnings per share are set to leap higher by 73% to 37.7p this year, which means that ARM is trading at a relatively undemanding 2016 P/E of 27.5 and PEG ratio of 0.4. A PEG ratio lower than one implies that the company’s shares offer growth at a reasonable price. 

The bottom line

So overall, even after recent gains, all three of ARM, Unilever and Reckitt still look attractive despite their lofty valuations. 

The post Should Investors Avoid Unilever plc, Reckitt Benckiser Group Plc And ARM Holdings plc After Recent Gains? appeared first on The Motley Fool UK.

Consistent cash flow drives constant and growing payouts at both firms, but valuations are getting high, and smaller firms such as RPS Group (LSE: RPS) look even more attractive candidates for a short- to medium-term investment.

The risk of over-paying

I’m a big fan of investing in larger firms with ‘defensive’ qualities over the long haul. Over a macro-economic cycle, Unilever’s consumer brand driven cash flow fluctuates far less than the cash-generating ability of firms in many other sectors. A similar story plays out with the cash earned by British American Tobacco’s smoking products, which enjoy the added ‘attraction’ of being addictive.

However, the valuations of these dividend-paying stars can wax and wane. If we pay too much to own a small slice of these enterprises there’s risk that our total returns could disappoint in the short to medium term if valuations happen to contract.

Unilever and British American Tobacco both expect single-digit earnings growth for 2016, which makes forward earnings multiples of 20 and 16 respectively look a bit rich. Those forward earnings will cover the firms’ dividend payouts around one-and-a-half times each, but the yields don’t seem to justify the ratings either — Unilever’s forward payment yields 3.2% and British American Tobacco’s 4.5%.   

Cyclical opportunity

Meanwhile, FTSE Small Cap company RPS Group looks much better value. At today’s share price of 221p, the development, environmental and energy resources consultancy trades on a forward price-to-earnings multiple around 9.5 for 2016. The dividend yield runs at 5%, and the firm expects forward earnings to cover the payout just over twice.

The shares are down around 37% from the peak they achieved at the beginning of 2014. My guess is that the share-price fall last year tried to anticipate a much larger collapse in earnings than the 3% dip we saw during 2015. Now, with City analysts predicting a 9% uplift in earnings for 2016, RPS Group looks attractively priced.

The company’s business has a greater element of cyclicality than we find at Unilever and British American Tobacco, which accounts for the larger share price swings as investor sentiment changes. However, the down movement looks like it could be an ‘overshoot’ to me, which is why I think on a short- to medium-term view RPS could deliver investors a decent capital gain as well as a top-of-the-league dividend payment — after all, we’ve seen where the shares are capable of travelling.

The post RPS Group plc’s 5% Yield Trounces Unilever plc’s And British American Tobacco plc’s appeared first on The Motley Fool UK.

Supergroup

I am convinced that fashion powerhouse Supergroup (LSE: SGP) should boast splendid bottom-line growth in the coming years as its international expansion rolls on. The Superdry manufacturer announced last week that retail revenues leapt 17% in the year to March 2015, helped in no small part by double-digit growth in its European store space.

As well as expanding further on the continent, Supergroup also announced plans to enter China through a joint venture with Trendy International Group, and follows the acquisition of distribution rights in North America and Mexico in March.

With shoppers across the globe flocking to snap up the retailer’s garbs, the City expects earnings to rise 12% and 15% in 2016 and 2017 respectively, driving the P/E ratio from 19.7 times to just 16.7 times next year. This is just outside the benchmark of 15 times that indicates stellar value.

Associated British Foods

Food and fashion play Associated British Foods (LSE: ABF) cheered the market last week when it advised group revenues edged 2% higher during the 40 weeks to June 20, with its Sugar and Retail divisions both performing extremely strongly. But it is the latter area which promises to light a fire under the bottom line as galloping demand for its Primark labels takes off in the UK and abroad.

Indeed, ABF announced plans to roll out three stores in Italy from next year, adding to its already solid presence in several other European markets including Germany and France. As well, the firm said that the first of its US stores will be opened in Boston during the autumn.

Although operating at the other end of the scale of the fashion scale to Supergroup, consumers the world over love a good bargain, and I expect earnings at ABF to surge skywards following an anticipated 6% dip this year and 7% rebound in 2016. Consequently I anticipate P/E ratios of 29.5 times for this year and 28.1 times for next year to keep on toppling.

BAE Systems

Shares in top-tier weapons builder BAE Systems (LSE: BA) received a fillip last week following news that George Osborne would spend at least 2% of British GDP on defence through to 2020. It is hoped that such measures will encourage other Nato members to open their chequebooks, particularly as fears over Russian intervention in Eastern Europe and the threat of ISIS rumble on.

Improving economic conditions in the US have provided a major boost to the defence sector during the past year or so, while BAE Systems specifically is also enjoying resplendent product demand from emerging regions — indeed, the firm’s hefty presence in Saudi Arabia was underlined last week after it agreed to establish a new repair and maintenance hub in the country with Al-Salam Aircraft.

The City expects BAE Systems to punch a modest 1% earnings rise in 2015, although this is anticipated to accelerate to 6% in the following year as previous sales pressures continue to peter out. And with these figures producing ultra-low P/E multiples of 11.6 times and 11 times for these years I reckon the engineering giant is a steal.

Unilever

I stocked up with shares in household goods specialist Unilever (LSE: ULVR) on account of its sprawling presence in developing markets. The company — which derives almost six-tenths of total revenues from emerging regions — is enjoying the fruits of improving consumer spending in these areas, and saw sales rise 5.4% in January-March, improving from 4.1% in the final quarter of 2014.

The formidable strength of the firm’s broad product portfolio is helping to push sales higher comfortably higher, from Domestos bleach and Dove soap through to Walls ice cream. So even in times of economic pressure, Unilever is able to keep revenues ticking higher through strategic price rises. And the London company’s great track record of product innovation has kept shoppers hooked.

In light of these factors the number crunchers expect Unilever to enjoy earnings growth of 15% in 2015, followed by an extra 7% rise next year. These figures create slightly-elevated P/E ratios of 20.6 times and 19.2 times correspondingly, but I believe the prospect of further explosive growth in the years ahead make the business a compelling buy.

The post 4 Stocks For Growth-Hungry Investors: Supergroup PLC, Associated British Foods plc, BAE Systems plc And Unilever plc appeared first on The Motley Fool UK.

Such companies have powerful brands, strong margins and prodigious cash flows. They perform relatively well when economic conditions are challenging. And, with their entrenched positions in developed markets, and increasing expansion into higher growth emerging markets, they have a structural tailwind for long-term growth. As such, investors are happy to pay a premium price.

“Buy on the dips” has been good advice over the years for these quality businesses, whose shares have risen without the great peaks and troughs that characterise cyclical companies.

With the world fretting about a Grexit, the FTSE 100 is down some 8% since hitting an all-time high in April. Unilever, Reckitt and Diageo have performed a little better than the wider market, but have certainly dipped significantly. Unilever and Diageo are both down 7% from their 2015 highs, while Reckitt is off by 6%. So, is now a good time to buy?

Unilever

When I looked at Unilever back in April, the forward price-to-earnings (P/E) ratio was a rich 22.5, with a prospective dividend yield of 3%. By May, the P/E had come down to 21.4 and the yield had edged up to 3.1%. I said at that time I thought Unilever could deliver decent long-term returns, but that, ideally, I’d be looking for an opportunity to buy a bit lower.

Despite the share price now being lower, the valuation is little changed — the P/E is 21.2 and the yield is still at 3.1% — due to some downward revisions in analysts’ earnings and dividend forecasts. As such, I have to reiterate my view on Unilever from May.

Reckitt Benckiser

In April, Reckitt Benckiser’s forward P/E of 25 was even higher than rival Unilever’s, while the yield of 2.1% was lower. By May, Reckitt’s P/E had come down to 23.8. I thought the rating was still a little high, but did note that Reckitt has often surpassed analysts’ earnings forecasts in the past.

Like Unilever, Reckitt has seen some recent downgrades to earnings and dividend forecasts, so the valuation is little changed from May, with the P/E at 23.9 and a yield of 2.2%. Once again, despite the dip in the shares, I have to reiterate my previous view on Reckitt.

Diageo

Global drinks group Diageo is another consumer goods company I looked at in April. At that time Diageo appeared somewhat better value than Unilever and Reckitt, being on a forward P/E of 20, with a yield of 3%. And I was bullish on Diageo’s prospects, when writing in May with the stock on a similar valuation.

Unlike Unilever and Reckitt, whose financial years coincide with the calendar year, Diageo has a June fiscal year end. When I was writing in April and May, my valuations were based on forecast earnings and dividends for June 2015. While Diageo hasn’t released its results for the year yet (they’re due on 30 July), I think it’s now appropriate to look to forecasts for the year to June 2016. The P/E is 19.6, with a yield of 3%, so, while I’m modestly positive about Unilever and Reckitt, I remain more attracted by Diageo’s valuation.

The post Is Now The Right Time To Buy Unilever plc, Reckitt Benckiser Group Plc & Diageo plc? appeared first on The Motley Fool UK.

Clearly, companies focused on necessity products such as food and clothing are likely to offer more stable financial performance than their cyclical peers. However, at the same time, cyclical companies can offer more upside in the long run – as long as you are able to stomach above-average volatility. Therefore, a mix of the two can prove to be a prudent and logical way forward for Foolish investors.

Cyclicals

With the UK economy continuing to go from strength to strength, cyclical consumer goods companies such as furniture seller, DFS (LSE: DFS), and Express Gifts owner, Findel (LSE: FDL), are on the up. Both companies are forecast to increase their earnings at a rapid rate, with DFS’s bottom line set to rise by 16% next year and Findel’s by as much as 21% in the current year. Clearly, such strong growth rates could act as positive catalysts on the share prices of the two companies, since they are at least double the growth rate of the wider index.

Despite this, both DFS and Findel trade on low valuation multiples, which indicate that they offer wide margins of safety. This appears to swing the risk/reward ratio in the investor’s favour, with DFS having a price to earnings growth (PEG) ratio of just 0.8 and Findel’s being even lower at 0.4. As such, and while they are cyclical businesses, they appear to be worth buying at the present time.

Defensives

Meanwhile, Unilever (LSE: ULVR) (NYSE: UL.US) and Morrisons (LSE: MRW) are far more defensive than DFS or Findel. In Unilever’s case, its defensive sales profile comes via the strength of its brands, since there are cheaper shampoos and other personal care products available.

However, even during challenging periods for the global economy, Unilever continues to command relatively high margins and, with over half of its revenue being derived from emerging markets, its growth rate is also very appealing. In fact, Unilever is set to grow its top line by 4.7% next year and, with cost savings and efficiencies to come through, its bottom line growth should be higher and could catalyse investor sentiment.

Of course, the sale of food is defensive since it is a necessity for all individuals. However, the pressure on household budgets in recent years has meant that many consumers have traded down to discount, no-frills operators such as Aldi and Lidl. This has meant that supermarkets such as Morrisons have lost out, with the company’s sales stagnating in the last five years, with heavy discounting and promotional offers causing margins to be squeezed heavily.

As such, Morrisons has made a loss in each of the last two years but, in the current year, it is expected to turn this around to post a profit of £377m on a pretax basis. And, with growth of 20% expected for next year, it could prove to be a surprisingly strong performer over the medium term – especially since it has a price to earnings (P/E) ratio of 15.6.

The post 4 Consumer Stocks Set To Post Stellar Returns: Unilever plc, WM Morrison Supermarkets PLC, DFS Furniture PLC And Findel plc appeared first on The Motley Fool UK.

Good-quality companies with consistent performance and attractive financial characteristics rarely sell cheaply, but periods of market weakness can provide an opportunity to buy the shares a little lower.

Unilever (LSE: ULVR), Whitbread (LSE: WTB), Shire (LSE: SHP) and Diageo (LSE: DGE) are all firms with attractive underlying businesses and may be worth keeping an eye on for a decent entry point.

Fast-moving consumer goods

Fast-growing brands such as Dove, TRESemmè, Knorr and Hellmann’s power Unilever’s cash-backed growth. The ‘defensive’ qualities of the firm’s business model are attractive, but macro-economic headwinds made forward progress challenging over recent years.

However, the outlook is turning up as Unilever strengthens its innovation pipeline, increases investment in core brands, and extends operations into premium segments and new markets. Although currency and commodity volatility persists, the firm reckons it will see further improvements in volume growth during the rest of 2015. 

At a share price of 2783p, Unilever’s dividend yield runs at 3.3% for 2016 and the payout is covered one-and-a-half times by forward earnings.

Fast-growing coffee and hospitality

It’s true that there’s an element of cyclicality in Whitbread’s hospitality and coffee business — quite a large one — but there’s a heck of a lot of growth going on, too! In fact, the firm’s large double-digit yearly earnings increases are mouth-watering.

The company owns the Premier Inn, Costa Coffee, Beefeater, Brewers Fayre, Table Table and Taybarns brands, with Costa and Premier standing out as the greatest drivers of growth. The shares have multi-bagged since 2009 despite looking expensive on conventional price-to-earnings measures the whole time.

At today’s 5075p, share price the dividend yield runs at around 1.8% for 2016 with forward earnings covering the payout about 2.6 times.

Growth in pharmaceuticals

Back in April, Shire released a healthy set of first-quarter results demonstrating that growth remains on track. The firm’s chief executive said the firm exemplifies the characteristics of a leading biotechnology company, delivering strong revenue growth and cash generation, while advancing its innovative pipeline and boosting its future growth profile through its acquisition strategy.

It’s hard to argue with the firm’s success, which has seen the shares power ahead. The man at the top thinks there’s more to come. Shire specialises in behavioural health, gastro intestinal conditions, rare diseases, and regenerative medicine, and there is a healthy development pipeline to keep things rolling along. The firm certainly makes an interesting investment alternative to sector peers GlaxoSmithKline and AstraZeneca.

At a share price of 5230p, Shire’s dividend yield runs at just 0.4%, but forward earnings cover the payout almost 13 times, suggesting the directors see plenty more opportunity for further growth.

‘Sin’ cash

Alcoholic consumer brands are attractive. Any consumer brand with repeat-purchase credentials tends to throw off cash, but the addictive nature of alcohol makes firms like Diageo seem even more ‘defensive’. People don’t tend to drop their favourite tipple from their shopping lists no matter how tough the economic times become.

Diageo owns well known brands such as Johnnie Walker, Crown Royal, J&B, Buchanan’s, Windsor, Bushmills, Smirnoff, Ketel One Vodka, Ciroc, Captain Morgan, Baileys, Tanqueray and Guinness. Last year Diageo earned about 37% of its operating profit from emerging markets such as Africa, Eastern Europe, Turkey, Latin America, the Caribbean, and the Asia Pacific, with the rest coming from Europe and North America.

Today’s 1874p share price sees the dividend yielding about 3.1% for 2016 with forward earnings covering the payout around 1.7 times.

The post Shares To Buy On Market Dips: Unilever plc, Whitbread plc, Shire PLC & Diageo plc appeared first on The Motley Fool UK.

Beta is a measure of how responsive a particular share is to wider movements in the stock market index. Shares with a beta of 1 will generally move proportionately by the same amount as changes in the market index. And so, shares with a beta of less than 1 tend to move less strongly with changes in the market index.

Unilever

Unilever’s (LSE: ULVR) focus on non-cyclical consumer products means that its revenues and earnings are less volatile to changes in the economy, because consumers tend to spend a similar amount on its products, even as their disposable incomes fluctuate.

But Unilever does earn a significant proportion of its earnings from Europe, particularly from Eurozone countries. A decline in the value of the Euro would have a significant impact to the sterling value of its earnings and dividends. So, although Unilever shares are less volatile to changes in index, Unilever may not be the best share to hold for fear of Grexit.

Unilever has a beta of 0.57 over the past five years.

National Grid

Most utility companies have a beta of less than 1, but National Grid (LSE: NG) is particularly attractive because substantially all of its revenues come from regulated assets. Unlike electricity generation companies, like SSE (LSE: SSE) and Centrica (LSE: CNA), National Grid’s revenues and earnings tend be stable even as wholesale electricity prices and demand fluctuate.

National Grid has a five-year beta of 0.33.

Next

Although not traditionally considered as a defensive share, Next (LSE: NXT) has a five-year beta of 0.55. This is because its sales has grown strongly despite constraints on household disposable income, and the popularity of the brand has continued to improve.

Next may be less volatile to changes in the stock market index, but Next is highly exposed to the dynamic fashion tastes. So far though, Next has been on the right side of fashion trends, with its underlying EPS climbed some 15% to 419.8 pence for the year ending January 2015.

IG Group

Spreadbetting and CFD provider IG Group (LSE: IGG) thrives when market volatility is high, particularly with high profile news events. This is because retail traders believe that there are more short term opportunities during these times. But higher volatility can be a double-edged sword for IG, as much as it is for its clients.

Back in January, when the Swiss National Bank (SNB) suddenly announced that it would drop the exchange rate peg, the value of Swiss franc against the Euro soared by up 30% within a 24 hour period. Because traders use leverage to magnify their gains and losses, and positions could not be closed in time, its clients suffered huge losses.

As bad debts racked up, this also caused IG to lose up to £18 million from the single event. Nevertheless, IG believes it will eventually recover substantially most of its losses.

Since then, IG has reviewed the maximum leverage it can offer. The effects of Grexit is more likely to have a more gradual effect on asset prices, and to some extent, Grexit has already been priced into the value of the Euro and most financial asset prices.

IG Group has a five year beta of 0.47.

The post Should You Buy These Low-Beta Shares As The FTSE 100 Extends Losses? Unilever plc, National Grid plc, NEXT plc & IG Group Holdings plc appeared first on The Motley Fool UK.