3 International Consumer Staples Giants to Consider
Robert is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
When an investor considers the consumer staples sector, familiar U.S.-based giants like Procter and Gamble and Colgate Palmolive usually come to mind. While those are undoubtedly great businesses, successful consumer products companies can be found among their international counterparts. Investors looking for geographical diversification should consider these three names:
Unilever (NYSE: UL) is a $110 billion, United Kingdom-based company with a broad array of products that sell very well in the United States. Some of these brands include Dove, Vaseline, Bertolli, and Lipton. The company has a long operating history of more than 100 years. In the company’s 2011 annual report, the company pointed investors to its underlying sales growth of 6.5% year over year. Unilever’s operations are spread geographically, particularly in the developing economies. The company’s emerging markets segment grew its sales by 11.5% in 2011 and now accounts for more than half of Unilever’s operations. Furthermore, Unilever got off to a great start in 2012. Underlying sales growth in the third quarter was up 5.9% year over year and up 6.6% through the first nine months versus the prior year. Unilever pays a quarterly dividend of 3.3% at current prices.
Nestle (NASDAQOTH: NSRGY) is a consumer products giant based in Switzerland. The company has a market value in excess of $210 billion. Nestle has a huge portfolio of brands, including Gerber and Stouffer’s, in addition to its KitKat, Butterfinger, and Crunch candy products. In all, Nestle is divided into seven product segments. Nestle was founded all the way back in 1866 and continues to provide investors with solid financial results and reliable dividends. As opposed to Unilever, Nestle derives the bulk of its business from the developed markets. 60% of Nestle’s 2011 sales came from developed economies, where the company saw 2011 organic growth of better than 4%. However, that is not to say that Nestle is struggling in the emerging markets—in fact, that segment provided 13% organic growth for Nestle in 2011. The first six months of 2012 saw positive results as well, with six-month organic sales growth clocking in at 6.6%. Nestle currently pays an annual dividend that amounts to a greater than 3% yield at current prices. The company has provided investors with a fantastic compound annual dividend growth rate of more than 19% over the last five years.
Danone (NASDAQOTH: DANOY) is the smallest firm of the three with a market value just north of $40 billion. Danone is based in France with operations worldwide. The company operates through four divisions: Fresh Dairy Products, Waters, Baby Nutrition, and Medical Nutrition. The Fresh Dairy Products segment makes up 58% of the company’s sales. This is where Danone’s namesake yogurts are concentrated. This segment provided 2011 sales growth of 4.6%. The fastest growing segment for the company in 2011 was its Waters division, where sales grew more than 15% year over year. Like Nestle, Danone pays its dividend once per year. Its current yield is approximately 2.75%, and the company has raised its distribution by almost 6.5% compounded annually over the last five years.
The Bottom Line
I’m a proponent of investing in the consumer staples sector. Companies that sell products that can be found in nearly every home are some of the best stocks to buy and hold for long periods of time. Revenues and earnings are stable and growing, and these companies offer investors reliable financial results and long histories of paying and raising dividends on a yearly basis.
Robert Ciura has no position in any stocks mentioned. The Motley Fool recommends Unilever. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!