How Unilever’s dividend benefits from this megatrend

first_imgHow Unilever’s dividend benefits from this megatrend  Jay Yao | Wednesday, 28th October, 2020 | More on: ULVR Image source: Amazon Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Our 6 ‘Best Buys Now’ Shares Jay Yao has no position in any of the shares mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alibaba Group Holding Ltd., Amazon, and PayPal Holdings. The Motley Fool UK has recommended Unilever and recommends the following options: short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and long January 2022 $75 calls on PayPal Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. “This Stock Could Be Like Buying Amazon in 1997” E-commerce is a megatrend that has generated a lot of value, both for many investors and for customers. Over the years, the trend has helped fuel the rise of giants such as Amazon and Alibaba, as well as payment apps such as Paypal. It’s also helped companies like Unilever (LSE: ULVR) too. Given its transformative potential, e-commerce doesn’t just benefit platforms and payment apps — it also benefits merchants and brands that correctly position themselves. In terms of brands, one savvy company taking advantage of the trend is leading consumer staple maker, Unilever. 5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Here’s how Unilever is growing in the critical category and how the growth is helping the company’s dividend. How e-commerce is good for many companiesAlthough it represents a departure from Unilever’s tried and true physical retail way of doing business, e-commerce is in many ways more beneficial for the consumer staple. With big data and AI, for example, it’s possible for e-commerce platforms (and by extension Unilever) to better dynamically price items in response to demand changes. If there is an economic boom in a certain region, platforms such as Amazon can increase the price of certain items faster in response to more robust demand. With more consumer data, e-commerce companies can also better target ads than physical retail stores and thus potentially help sell more merchant goods. With e-commerce’s subscription option, there’s also potential for more stable demand. Once a user has signed up for’s ‘subscribe and save’ option, for example, they will continue to order the same product until cancellation. For many brands, the subscription product is better than traditional stores where the customer has to make the choice every time in terms of buying a product. More stable demand could translate into a higher valuation in my view.E-commerce is also a great way for Unilever to reach audiences in emerging and developing markets faster. Rather than having to do numerous deals with various individual local stores/chains to expand in a territory, Unilever just has to make one deal with a platform like Alibaba, and the consumer staple can reach many millions of people. How Unilever’s e-commerce business is growingAs a result of management’s focus on the category and e-commerce’s overall growth, Unilever’s e-commerce business has grown rapidly over the past few years. In 2019, for instance, Unilever’s e-commerce business grew 30%. For the first half of this year, the company’s business grew even faster, at 49% year-on-year to €2.2bn as the coronavirus outbreak catalyzed more online purchases. Due to the growth, e-commerce now accounts for over 8% of Unilever’s total sales. A growing e-commerce business is good for the company’s dividend because it makes it more sustainable in my view. Given that e-commerce is growing faster than traditional physical commerce, I think companies will need to do well in the category if they want to keep or increase long-term market share. Unilever’s growing e-commerce business is also good because I think it will help increase the company’s free cash flow in the long run, given increasing sales. If the company’s free cash flow increases consistently, I think there’s a decent probability that management raises the dividend. center_img I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Simply click below to discover how you can take advantage of this. Enter Your Email Address Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! See all posts by Jay Yaolast_img

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