Gavin GrahamUnilever PLCULCOMMENTMar 17, 2014

DEO is not a good name to be in. For the same type of underlying safety and dividend growth, take a look at Nestle or PG or UL.

New management has made this a growth business again. Earnings and margins are rising. Cost structure is fantastic. Are in 190 countries. Are spinning off their ice cream business which should create shareholder value. Trades at 17x PE and pays a 3.3% dividend. One of the fastest growing consumer products companies.

Consumer staples are outperforming in the last few days, and that speaks to the advantage of having a balanced portfolio. Companies like KHC, UL, KVUE, and Nestle. It's not that they won't be affected (their costs would go up), but they're far less cyclical than other businesses. Earnings will be much more stable. Earnings could fall 10%, but not 50%. Dividends will be sustained.

Companies like Unilever and Nestle are huge in NA, but huge globally as well.

UL is his choice. Stock price was challenged, but look at the business fundamentals. 2024 was spectacular, with prices going up ~20-30%. Over 50% of revenues are from EMs. Pretty diversified and pretty safe way to get exposure to EM growth.

His name in consumer stocks. Big, boring business. Has grown developing market revenues to be greater than half the company. Brand power, staying power. Yield is 5%.

60% of revenues come outside North America, which are currencies that are fading against the strong US dollar which rose along with interest rates. If the USD falls, then the S&P could underperform (they've outperformed the past 10 years). UL needs a lower USD to increase earnings. He still owns it. Pays a near-4% dividend, so he's holding onto it and waiting.

Very slow growth however excellent underlying business.
Great franchise that has excellent brand.
M&A will continue to enhance shareholder value.
Steady dividend yield.
Expecting further share price appreciation.
Strong management team. 

Pays a 3.5% dividend. This is the way to play emerging markets, from which they derive 55% of revenues. The dividend will grow over time.

Quality company that he currently owns in portfolio. One of the largest companies in consumer package business. Strong dividend yield (4-5%) provides element of safety. Expects company to be able to pass on inflation costs to consumers. Would recommend buying.