“The fastest volume growth for five years, steady price increases and confirmation of its status as one of the FTSE 100’s ten biggest dividend payers all give Unilever’s third-quarter results a solid feel,” says Russ Mould, AJ Bell Investment Director. “This will also provide management and shareholders with all the more reason to be happy that they fended off Kraft-Heinz’s bid in 2017, especially as part of the payment would have come in the raider’s stock. That has lost two-thirds of its value since the failed approach while Unilever’s have advanced by some 40%.
Source: Refinitiv data
“Investors will be particularly pleased to see underlying sales growth of 4.4% in Q3, especially after a small dip in Q2.
Source: Company accounts
“In fact, underlying sales growth came in at its highest level since Q2 2016 and that in turn was driven by steady price increases of 0.5% and the best volume growth since Q3 2015 at 3.9% year-on-year.
Source: Company accounts
“Sales of soaps and personal care products such as Dove and Lifebuoy, cleaning products such as Domestos and comforting cupboard and fridge staples such as Hellmann’s mayonnaise and Ben & Jerry’s ice-cream helped to drive volumes.
“Some of this will be down to the effect of the pandemic and lockdowns so the onus now is on Unilever to keep driving underlying sales higher, as the firm’s recent history is a little chequered when it comes to meeting its trend growth target of 2% to 4% a year, despite its powerful range of well-tended brands.
“Nevertheless, investors will also draw comfort from the third-quarter dividend of €0.4104, or 37.46p, a share. In euro terms, that is the seventh distribution in a row at that level and if repeated in the fourth quarter would put Unilever on track to be among the ten highest paying companies in the FTSE in sterling terms. A reliable dividend yield of more than 3% may also appeal to income investors who have taken a battering as more than 50 FTSE 100 firms have cut, suspended, deferred or cancelled dividend payments at some stage during this calendar year.”
|
|
2020E |
|||
|
|
Dividend (£ million) |
Dividend as % FTSE total |
Dividend yield (%) |
Dividend cover (x) |
|
BAT |
4,948 |
8.7% |
7.8% |
1.53x |
|
BP |
4,145 |
7.3% |
9.4% |
-0.62x |
|
GlaxoSmithKline |
4,014 |
7.1% |
5.6% |
1.45x |
|
Royal Dutch Shell |
3,893 |
6.9% |
5.2% |
0.72x |
|
Rio Tinto |
3,836 |
6.8% |
6.5% |
1.55x |
|
AstraZeneca |
2,766 |
4.9% |
2.5% |
1.44x |
|
Vodafone |
2,238 |
4.0% |
7.6% |
0.78x |
|
BHP Group |
1,973 |
3.5% |
5.6% |
1.49x |
|
Unilever |
1,803 |
3.2% |
3.2% |
1.46x |
|
National Grid |
1,740 |
3.1% |
5.3% |
1.09x |
Source: Sharecast, consensus analysts’ forecasts, Refinitiv data
