Recent Purchase – UN

The market has been volatile the last few days and this presents opportunity to add/initiate positions. I have been missing Unilever in my portfolio for a while now and when I noticed that the stock has dropped close to 10% in the last one month and is closer to the 52 week low, I initiated a position. With the market continuing to be volatile, the stock can drop even more, but given the growth and consistency that is Unilever, I am ok to initiate a position now. I hold PG which is belongs to the same sector. I am long on PG too though I would like to add to my PG position in the near future. 

I purchased 40 shares of UN at $38.06 on 10/15/2014. With commission, the total cost comes to $1,529.40. With a quarterly dividend of $0.38/share, the yield comes to 4.00% and this purchase adds $60.80 to my forward annual dividends. Of course this dividend fluctuates because of currency conversion.

They have huge portfolio of popular brands including Dove, Axe, Lipton etc and these are some that we personally use in our household. The revenue and EPS has increased during the last several years through at different rates. Revenue has increased at a much lower rate compared to the EPS. Dividend Mantra recently posted a detailed post on the finances of the company.

Unilever trades as UL (ADR for shares trading in London) and UN (ADR for shares trading in Amsterdam). Both represent the same company and have equal stake in Unilever. But UL trades at a small premium because there are no taxes withheld for dividends because of the tax treaty between US and UK. For UN, foreign taxes are withheld from dividends, but these can be adjusted dollar for dollar (up to $300 I presume) as part of the tax return. So there is a small opportunity cost lost because of this, but this is offset by a higher yield on the shares. I already hold VWO ETF that withholds foreign taxes and I already have to do the paperwork during taxes to offset that. So the UN purchase shouldn’t add any paperwork for me. But I should start looking closely at these purchases going forward to make sure I don’t hit the cap.

Morningstar has a fair value of $46.00 for the stock and it is rated 4 stars.

The portfolio page will be updated soon to reflect this purchase.

Disclosure: Long UN

Image courtesy: unilever.com

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7 thoughts on “Recent Purchase – UN

  1. DGJ,

    Great to have you on board as a fellow shareholder! I love the valuation on Unilever when compared to peers like PG, and the higher yield to boot. Great stuff, especially considering that I think they’ll likely grow just as fast or faster.

    Best regards.

  2. DGJ,

    Great buy under $40. I was tempted when all hell was breaking loose yesterday. I really want to try and clean up some of my current positions before I add any more new ones. A consumer products company that yields 4% is awesome!

    MDP

  3. Great pick up with UN. I just initiated a position in UL about a month ago. Unilever has caught my eye for many years and I only recently pulled the trigger. I was very content owning a similar name, PG, for many years and didn’t feel the need to double up on that consumer sector. But times change and I added UL. Happy to be a fellow shareholder.

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