The Scottish Mail on Sunday

Seek div­i­dends from the brands that won’t let you down in a cri­sis


UNILEVER’S brands range from Ben & Jerry’s ice cream to Per­sil wash­ing pow­der, Domestos de­ter­gent and Sure, the de­odor­ant that, fa­mously, ‘won’t let you down’.

Reckitt has Durex, Nuro­fen and Harpic among its list of lead­ing brands. Ev­ery­day prod­ucts, th­ese names have stood the test of time and re­main trusted by con­sumers across the de­vel­oped world. Many are be­ing suc­cess­fully rolled out in emerg­ing mar­kets too, as peo­ple in re­gions such as Asia and Latin Amer­ica be­come wealth­ier and turn to re­spected global brands.

Di­a­geo is slightly dif­fer­ent, be­cause it fo­cuses on al­co­hol, with an ar­ray of well-known tip­ples in­clud­ing Smirnoff, John­nie Walker, Bai­leys and Guin­ness. The com­pany is par­tic­u­larly strong in North Amer­ica, but it op­er­ates world­wide and is grow­ing fast in Asia.

All three firms have an im­por­tant char­ac­ter­is­tic in com­mon: they sell mil­lions of prod­ucts to mil­lions of peo­ple every sin­gle day. A mi­nor­ity Con­ser­va­tive Govern­ment in the UK is un­likely to change that. It might even en­cour­age con­sump­tion of Di­a­geo’s wares.

The shares do not come cheap. Di­a­geo is 2326p and the fore­cast div­i­dend is 63p, putting the stock on a yield of 2.7 per cent. Unilever is 4328p and pays its div­i­dend in eu­ros, which means share­hold­ers ben­e­fit if ster­ling ex­pe­ri­ences a pro­longed pe­riod of weak­ness. The 2017 div­i­dend is fore­cast at €1.42, which trans­lates to 125p, de­liv­er­ing a yield of 2.9 per cent.

Reckitt shares change hands at 7954p and a div­i­dend of 169p is ex­pected this year, giv­ing a yield of 2.1 per cent. Shelling out up to £80 for one share can un­set­tle some in­vestors, but in re­al­ity, the cost is not the most im­por­tant thing in this case – what mat­ters is the di­rec­tion of travel. Th­ese three are al­most bound to de­liver over the long term, par­tic­u­larly if in­vestors rein­vest their div­i­dends year in, year out. House­builders are at the slightly riskier end of the shares spec­trum. Most of them fell at the end of last week on con­cerns that the econ­omy could slow down, stalling de­mand for new homes.

It is dif­fi­cult to pre­dict how the hous­ing mar­ket will evolve in the com­ing months and years. House prices are not ris­ing as fast as they were, but the UK still suf­fers from a chronic short­age of homes and that is un­likely to change soon. Most builders of­fer gen­er­ous div­i­dends as well, so those in slightly spe­cial sit­u­a­tions could be re­ward­ing. Bo­vis Homes is a case in point. It has been through a trou­bled pe­riod, is­su­ing a shock profit warn­ing in De­cem­ber and ad­mit­ting it would build fewer than ex­pected homes in the year. Chief ex­ec­u­tive David Ritchie re­signed days later and Bo­vis was then sub­ject to bid ap­proaches from two ri­vals, Redrow and Gal­li­ford Try. Both were re­jected and in April the firm ap­pointed for­mer Gal­li­ford boss Greg Fitzger­ald as its new chief ex­ec­u­tive. Fitzger­ald, 53, started out in the sec­tor as a 17-year-old tea boy and is ad­mired as one its lead­ing lights, known for call­ing the prop­erty mar­ket bet­ter than most and tak­ing de­ci­sive ac­tion when nec­es­sary. He is likely to fol­low suit at Bo­vis. The shares fell a penny to 922p on Fri­day but they should re­cover, as Fitzger­ald takes the firm in hand. A div­i­dend of about 45p is ex­pected this year too, putting the shares on a yield of al­most 5 per cent.

Gleeson Homes of­fers another twist on the house­build­ing mar­ket, as it spe­cialises in af­ford­able homes, mainly in the North of Eng­land. Rec­om­mended by Midas in 2011 at 104p, the shares had risen to 612½p when we last looked at them in March of this year and they have since risen fur­ther to 655p.

THE price was barely changed af­ter the Elec­tion re­sult and the 2017 div­i­dend is fore­cast at 19½p, putting the shares on a yield of just un­der 3 per cent. This is at the low end of the range among builders, but Gleeson’s af­ford­able homes for­mula has seen the com­pany grow by leaps and bounds over the past six years and it should con­tinue in a sim­i­lar vein.

And if top brands or house­builders do not ap­peal, some in­vestors might fancy low-cost re­tail­ers, such as B&M Euro­pean Value

Re­tail or Con­vivi­al­ity, which owns Bar­gain Booze and Wine Rack. SOLID: Strong brands like Ben & Jerry’s and fa­mous tip­ples, below, will weather the storm

Chaired by for­mer Tesco boss Sir Terry Leahy, B&M has more than 500 stores, sell­ing a huge range of non-food items, from gar­den fur­ni­ture to mi­crowaves to toys, all at bar­gain base­ment prices. Re­sults last month showed prof­its up 18 per cent to £183mil­lion for the year to March 25 and a 21 per cent in­crease in the div­i­dend to 5.8p.

B&M shares have done well over the past year and now trade at 357p, but if con­sumers de­cide to tighten their belts, the com­pany should ben­e­fit and the shares should rise. Bro­kers ex­pect the price to top 400p in the next 12 months.

Con­vivi­al­ity may also pros­per if the UK econ­omy fal­ters and peo­ple seek so­lace in the bot­tle. Tipped by Midas in 2013 at 144½p, the shares have more than dou­bled to 308p and the firm has been trans­formed. Hav­ing bought lead­ing distrib­u­tors Matthew Clarke and Biben­dum, it is now the largest in­de­pen­dent drinks whole­saler in the UK and op­er­ates more than 700 off-li­cences on a fran­chise ba­sis.

The stock has per­formed well but it should con­tinue to rise, with the mar­ket sug­gest­ing the price will reach about 380p by next sum­mer.

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SURE THING: The own­ers of global con­sumer brands of­fer steady in­come
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