Next on the list is Anglo-Dutch consumer goods and packaged foods company Unilever PLC (UL).
If you’ve ever set foot in a supermarket anywhere in the world, then you are familiar with Unilever’s brands. Among many others, they include Axe, Ben & Jerry’s, Bertolli, Dove, Lipton, St Ives, VO5 and Vaseline.
If there was ever a set of products that was unlikely to fall to technological obsolescence or a black swan event, it would be Unilever’s.
But while its products might be mundane consumer staples in the West, UL has excellent growth prospects abroad. Unilever gets nearly 60% of its revenues from emerging markets, and while that hurt the company this past quarter, it ensures that UL has a bright future as living standards continue to rise.
Unilever also has one of the strangest share structures of any company on the planet. It’s listed in both London and Amsterdam as two separate companies, Unilever PLC and Unilever NV (UN), respectively, and both trade in the U.S. as ADRs. Back in the 1930s, management found it easier and cheaper to do a “business merger” rather than a “legal merger” between the British and Dutch companies that today make up the Unilever Group.
Don’t be distracted by any of this. For most intents and purposes, UL and UN are the same. The only effective difference is that UN is subject to 15% withholding taxes on dividends in the Netherlands, whereas UL is not. This does matter somewhat, as the dividend is an important part of Unilever’s returns. The company has raised its dividend every year for over 25 years and currently yields 4%.
For this reason, I recommend UL over UN.