Assessing the Sustainability of Unilever PLC's Upcoming Dividend
Unilever PLC (NYSE:UL) recently announced a dividend of $0.45 per share, payable on 2023-12-08, with the ex-dividend date set for 2023-11-16. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Unilever PLC's dividend performance and assess its sustainability.
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Unilever is a diversified personal-care (52% of 2022 sales by value), homecare (14%), and packaged food (34%) company. Its brands include Knorr soups and sauces, Hellmann's mayonnaise, Axe and Dove skin products, and the TRESemme haircare brand. The firm has been acquisitive in recent years; notable purchases include Paula's Choice, Liquid I.V., Horlicks, Garancia, and The Vegetarian Butcher.
Unilever PLC's Dividend Analysis
A Glimpse at Unilever PLC's Dividend History
Unilever PLC has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Unilever PLC's Dividend Analysis
Breaking Down Unilever PLC's Dividend Yield and Growth
As of today, Unilever PLC currently has a 12-month trailing dividend yield of 3.74% and a 12-month forward dividend yield of 3.80%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Unilever PLC's annual dividend growth rate was 2.70%. Extended to a five-year horizon, this rate increased to 3.60% per year. And over the past decade, Unilever PLC's annual dividends per share growth rate stands at 7.60%.
Based on Unilever PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Unilever PLC stock as of today is approximately 4.46%.
Unilever PLC's Dividend Analysis
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Unilever PLC's dividend payout ratio is 0.52.
Unilever PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Unilever PLC's profitability 8 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Unilever PLC's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Unilever PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Unilever PLC's revenue has increased by approximately 6.80% per year on average, a rate that outperforms approximately 50.75% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Unilever PLC's earnings increased by approximately 1.10% per year on average, a rate that outperforms approximately 42.3% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 2.40%, which outperforms approximately 41.73% of global competitors.
Next Steps
Considering Unilever PLC's consistent dividend payments, moderate dividend growth rate, manageable payout ratio, strong profitability, and positive growth metrics, the company stands out as a potentially reliable dividend payer. These factors are crucial for investors who prioritize steady income streams in their portfolios. As Unilever PLC continues to navigate the dynamic consumer goods landscape, its ability to maintain and potentially increase dividend payouts will be a key indicator of its financial health and strategic success.
For those value investors seeking to enhance their portfolio with dividend-yielding stocks, Unilever PLC's upcoming dividend payment, along with its historical performance, could be an opportunity worth exploring. As always, it's essential to conduct thorough research and consider individual investment goals before making any financial decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
