Is Buying Unilever PLC (LON:ULVR) For Its Upcoming £0.32 Dividend A Good Choice?
Attention dividend hunters! Unilever PLC (LSE:ULVR) will be distributing its dividend of €0.32 per share on the 21 March 2018, and will start trading ex-dividend in 9 days time on the 15 February 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Unilever can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. Check out our latest analysis for Unilever
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is its annual yield among the top 25% of dividend-paying companies?
Does it consistently pay out dividends without missing a payment or significantly cutting payout?
Has dividend per share risen in the past couple of years?
Does earnings amply cover its dividend payments?
Will the company be able to keep paying dividend based on the future earnings growth?
How well does Unilever fit our criteria?
The current trailing twelve-month payout ratio for the stock is 65.43%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 65.21%, leading to a dividend yield of 3.74%. In addition to this, EPS should increase to €2.28. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. ULVR has increased its DPS from €0.48 to €1.26 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes ULVR a true dividend rockstar. In terms of its peers, Unilever produces a yield of 3.11%, which is high for Personal Products stocks but still below the market’s top dividend payers.
Next Steps:
Taking into account the dividend metrics, Unilever ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three pertinent aspects you should further research:
1. Future Outlook: What are well-informed industry analysts predicting for ULVR’s future growth? Take a look at our free research report of analyst consensus for ULVR’s outlook.
2. Valuation: What is ULVR worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether ULVR is currently mispriced by the market.
3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.