5-Bullet Sunday

5 Bullet Sunday #48

Another week has finished and we’re approaching the holiday season very quickly. It was a busy week, but also very productive. The latest podcast is live about Dividend Taxation and I shared with you a new entrant to the Noble 30 in replacement of Sodexo.

Without further ado, enjoy today’s 5 bullet Sunday 👌


5-Bullet Sunday is a weekly blog post with 5 topics that were on my mind this week related to Financial Independence and Dividend Growth Investing or something that just fed my curiosity. An overview of earlier posts can be found here

🌟 Unilever NV Unilever PLC

Today marks the end of a 90 year era for Unilever. As per today, the company is a fully British company and no longer partially Dutch.

This is really a unique moment in the company’s history, because in 1929 Lever Brothers (UK) and Margarine Unie (NL) decided to merge into Unilever. The reason why the company still exists today was due to it’s dual listing, because it allowed the company to continue business during the Nazi occupation of the Netherlands during the 2nd world war.

Unilever Plc was not able to communicate with Unilever NV during those years and Unilever Plc simply kept the company alive.

Source: 1939 annual review and accounts, page 1

Fast forward to today: If I understand it well, then the dividend will be paid in British Pounds going forward. I’m not too happy with it, because it means that we as EUR focused investors will get additional currency risk going forward.

NV Shareholders that are registered in NV’s shareholders’ register should be aware that, if they take no action prior to the Cross-Border Merger and receive New PLC Shares in certificated form, they will receive dividends in Pounds Sterling and will encounter formalities when attempting to transfer or otherwise take action in respect of those New PLC Shares in the future that are different from the equivalent formalities for transferring or taking action in respect of shares in a Dutch company

Source: https://www.unilever.com/Images/faq-for-private-shareholders-unification-of-unilevers-legal-structure_tcm244-552288_en.pdf

So far the company has been using the dividend in Euros as their dividend growth track which was a nice uninterrupted curve upwards compared to the GBP equivalent.

Pity…

🌟 Danone is taking it serious

Danone announced this week that it is taking additional measures in their effort to transform in a more localized model.

So far the company has been managed as a typical French company (no offense!): everything directed from the HQ with a strong corporate hierarchy which is referred to in their second bullet.

This week’s announcement also had another message included: the company wants to cut costs by 1 billion Euros by 2023 through a reduction of 20% in overhead.

This is really a lot in Euros, but I was personally surprised that they are also referring to “just” 1500 to 2000 reduction in full-time jobs. Some simple math tells me that this means minimally 500K in costs per employee. Not too shabby I would say!

To be honest, I think that every company needs to do this from time to time, because it’s the proverbial fat-on-the-bones every company needs to get rid of. It’s not like Danone is in a deep crisis right now, so it feels like they’re still doing it out of strength without the need to sell for instance their most valuable assets.

As always, I do feel pity for the people impacted, because I know it will create a lot of anxiety in their families, especially if they are the main providers of income. This is the unfortunate side-effect of a capitalistic system, but we need this to keep companies growing, innovating and ultimately create job opportunities elsewhere.

Danone is in my top 5 largest positions and I’m personally very supportive to these developments. I strongly believe that it will provide stronger agility to adapt to a continuously changing environment. Ultimately it will set the company up for the next leg of earnings growth and subsequently dividend growth.

🌟 Chart of the week

I found the below chart very interesting, because it shows how marketing is influencing us and the media. I still remember when black Friday started to become popular ~10 years ago with the introduction of Amazon in Europe.

Image

Until then Easter Monday was the biggest “special” shopping day in the year, because many people used that day to buy furniture. There wasn’t really anything else out there except for the regular shopping days just before Christmas or the discounts on TV’s just before a major football tournament.

But look at what’s happening now as evidenced in the above chart. We can spend our evenings refreshing Amazon non-stop from October until the end of the year.

There’s never been a better time in history with incentives to get your wallet totally emptied and loaded up into debt with stuff you probably don’t need. I mean, how many electronics and sneakers could you possible need?

So what does this chart below tell me?

That you really don’t need to feel that you’ll be missing out on an opportunity to buy some Christmas presents for your family at a discount. There will be ample opportunities and I would even dare to challenge that continuous discounts are not discounts anymore. Those are just regular prices…

🌟 Recommended Read

This week it’s all about inspiring you with different stocks which might be worth considering for you in your portfolio’s, wherever you come from 🌎.

Rob from Passive Canadian Income wrote a nice article about the top 5 Canadian dividend growth stocks to hold forever. Those are some very interesting stocks and I must confess that I didn’t know all of them. All of them seem to have some pretty decent dividend growth track records. Worth to check it out I would say.

The Dividend Guy wrote an article about his top 3 utility stocks. I don’t own really utility stocks myself except for the Spanish Red Electrica and I could still do with another utility stock in my portfolio. Hence, it was interesting to read what his top 3 picks are.

Passive Income Pursuit wrote an article about the most recent Dividend hike from Aflac. He shares his thoughts about it including some dividend history statistics. I don’t own Aflac, because I own Chubb and Munich Re already, but I’ve found Aflac always very interesting. Check it out if you’re interested.

🌟 Recommended Video

What Zidane could do with a ball, Maradona could do with an orange

Michel Platini

That’s it for the week. I hope that you enjoyed this week’s 5-Bullet Sunday 🙏

As always, have a lovely week ahead!

PS: don’t forget that every comment = 1 Euro to Kiva.

Yours Truly,

European Dividend Growth Investor


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Disclaimer

I’m not a certified financial planner/advisor nor a certified financial analyst nor an economist nor a CPA nor an accountant nor a lawyer. I’m not a finance professional through formal education. I’m a person who believes and takes pride in a sense of freedom, satisfaction, fulfillment and empowerment that I get from being financially competent and being conscious managing my personal money. The contents on this blog are for informational and entertainment purposes only and does not constitute financial, accounting, or legal advice. I can’t promise that the information shared on my blog is appropriate for you or anyone else. By reading this blog, you agree to hold me harmless from any ramifications, financial or otherwise, that occur to you as a result of acting on information provided on this blog.

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It's my desire to retire early via Dividend Growth Investing as a passive income stream. This is not easy and especially when living in Europe. That's why I started this blog and share my journey: to give you a European perspective.

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Matthew Payne
Matthew Payne
7 months ago

Hi there – I wanted to say thank you for sharing all of the insights that you have on this web page. It was a pleasure to stumble upon. Very informative and entertaining. I have UNA shares on my brokerage (Interactive Brokers). Can I expect my UNA shares to be cancelled and receive ULVR shares, on the London exchange, as a replacement?

European DGI
Admin
Reply to  Matthew Payne
7 months ago

Hi Matthew, I can’t answer that really, because it depends on your own situation. Last Monday my broker changed the Unilever NV into Unilever PLC, but the shares are still trading in Euro and on the Amsterdam Stock Exchange. If all went well, then you should have your shares converted already. I’m curious to hear about your experience!

Phil S.
Phil S.
7 months ago

Sooo, Unilever, I wanted to share some questions/thoughts: Meanwhile I have the PLC shares in my portfolio (GB00B10RZP78 – traded at Euronext Amsterdam – still traded in EUR). With the change to PLC and I say it right upfront, I did not do a lot of research yet: Do you know if Unilever will report in GBP moving forward? Because that’s my theory – again without background check – why the PLC/GBP dividend is a bit jumpy. Unilever reported in EUR, defined the dividend in EUR and exchange rate effects resulted in the GPB dividend being “jumpy”. If Unilever reports… Read more »

European DGI
Admin
Reply to  Phil S.
7 months ago

Hi Phil,

We think exactly the same. I think that the currency risk of the dividend has now been transferred from the GBP to the EUR investor. As you can imagine, I’m not too excited about that. Unfortunately there’s not much that we can do there and it doesn’t really change my investment case. It’s just a bummer I would say…

Makes me also wonder: why did Dutch shareholders agree to the move? I would assume that the large pension funds and such would also prefer to limit their exposure to currency risks.

Mark
Mark
Reply to  European DGI
7 months ago

But at least there is no dividend withholding tax in the UK right? Not like the 15% treaty we have with the US or France etc.

Mark
Mark
7 months ago

Curious to get your perspective on what is a better company/stock to buy today: Unilever or Danone?

Mark
Mark
Reply to  European DGI
7 months ago

Think both are interesting but generally trying to keep my portfolio slightly focused around 40 holdings and don’t want to include too many similar consumer staple stocks that generally have slower (dividend) growth rates. Currently hold a small position in Unilever and considering to add to it or initiate a position in Danone. Also have Ahold on my radar as I am intrigued by a share price that is at the same level as pre-COVID while the company is benefitting in the short-term. But will have to make some choices there in determining what I deem the best long-term opportunities.… Read more »

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