Unilever

[Dividend Watcher]

Kerim, the original intent of my post was just to laud the frankness and lucidity of UL's management during the conference call. Both guys were so well-spoken it puts the majority of conference call discussions to shame. To me, it was refreshing. I get bored when management starts reciting what is already shown in the financial statement release or starts speaking in industry jargon about the business. It doesn't bring much to my understanding of their SWOT analysis of the business or environment they are operating in. I've said it before; I am as much a "story" man as well as looking at the numbers type. I was not trying to call out a company that everyone should be thinking of purchasing.

I agree, it's been a bumpy road and the company has and continues to have many challenges. In addition, you mustn't overlook the effects of currency volatility on the dividend stream nor the "law of large numbers" that UN/UL has (or PG, MCD or CL or any number of companies that have significant business overseas) that makes it hard to grow even 8% per year consistently. I have to admit, CL seems to be managing it better than others so far.

As to the bumpy dividend in the home currency, I agree with you and knew that going in. But I also looked at their brand portfolio and management's focus on shedding the low-growth or non-essential products and investing in regional brands they think will benefit them. PG does the same. CHD does it also and ended up being a condom & sex toy vendor in addition to their other fine brands. (Had to mention the Trojan lineup just because I think it humorous.) Can't speak to CL since I haven't looked at them in a while as it's usually out of reach and too low a yield for me.

As to the tax consequences. Unilever is a conglomeration of a Netherlands-based company, UN listed in the U.S., and a British-based company listed as UL. It's a quite complicated business structure as many seem to be in the Eurozone. The U.S. has tax treaties with Great Britain that provide for no withholding of taxes on dividends for holders in qualified retirement plans. Don't know about taxable accounts but there you already get the foreign tax credit unavailable to pre-tax retirement accounts. There is no such agreement with the Netherlands. So, dividends come in with no withholding for me although still see the effects of currency translation.

I'll address the currency effects but I think we ought to start a new thread ... so I will but first I need to get back to my office and finish the cleaning I started yesterday before the customers start calling again.