Thursday, August 22, 2013

Unilever: the Dutch P&G

Unilever is a Anglo-Dutch company, which supplies fast moving consumer goods. The two parent companies, NV and Unilever PLC (PLC), together with their group companies, operate as the Unilever Group (Unilever). The Company’s four product areas are Personal Care, Foods, Refreshment and Home Care. They have 14 brands with sales of more than €1 billion a year. The company is quite diversified, both in their products as well as their geographical markets. It's the Dutch version of Procter & Gamble.

In 2012 personal care and home care had the highest sales growth (+10%). Europe has lagged in sales growth but Asia and the Americas are growing nicely (+8-10%).


Unilever is a dividend friendly company. As stated in the 2012 annual report, one of the highlights was a consistent dividend that continues to provide a good return to shareholders. The table below shows the dividend payments in the last years. In the past 10 years its compounded annual growth rate (CAGR) was 10%. The current yield is 3.6%.

YearDividendCAGR (since 2000)
2013€ 1,0510%
2012€ 0,9510%
2011€ 0,8810%
2010€ 0,8210%
2009€ 0,7811%
2008€ 0,516%
2007€ 0,507%
2006€ 0,477%
2005€ 0,447%
2004€ 0,427%
2003€ 0,387%
2002€ 0,3810%
2001€ 0,3512%
2000€ 0,32-

Payout ratio

Free cash flow in 2012 was €4.3 billion. Total cost of dividend was around €2.7 billion, so the payout-ratio (based on free cash flow) stands at a healthy 62%.


· The price/earnings ratio is around 19 which is around the average or maybe slightly higher than the last few years.
· Based on its 5 year average yield (2.9%) Unilever should be valued around €36
· A 20 year DCF-valuation comes at €37. In this calculation I’ve estimated a 10 year growth rate of 9% (earnings) and 10% (dividend). The perpetual growth rate is 6% for both earnings and dividends. Discount rate is 10%.


Unilever is one of the few Dutch dividend champions (RDS is the other). Since I live in Europe I’d like to have a certain amount of dividend income to be in the euro currency. This way I am not 100% dependable on macro-economic issues which could influence USD.EUR rates. Besides this point, Unilever has proven to be a dividend champion in the last 20 years and is a great company to own. Unilever is priced fairly in my opinion so I’ve initiated a position last week at € 29.87 (incl. commission costs) for 37 shares.


  1. I think like you that Unilever is a great company. It is a solid and stable, is the PG of Europe. A great choice to diversify geographically and currency.

  2. Hi Magallanes, thanks for stopping by! I totally agree with your statements. Although I wish I bought a little later since prices dropped slightly ;)

  3. I have owned UL (US ADR) in the past and am looking for a good entry point again. I totally agree that long term this is a great company.

    1. Hi S.B! Thanks for your comment. Let me know when you think it's time again to load up, I'll see how much cash I can spare ;)