Currently, investors would need to buy roughly $29,400 worth of Unilever (UL +0.42%) stock -- or about 542 shares -- to receive $1,000 in annual dividend income. As impressive as the consumer staples juggernaut's 3.4% dividend yield is, this outlay of hard-earned cash may make $1,000 of dividend income seem unattainable to many investors.
However, let's consider it through a different historical lens.
Had an investor bought $400 of Unilever stock annually starting in 2000 and reinvested dividends, they'd now have a stake worth about $31,000, after investing only $10,000 over those two-and-a-half decades.
I like to frame things in this manner to highlight what less than $8 worth of Unilever stock bought weekly could turn into -- rather than seeing that overwhelming $29,400 total needed right now. Best yet for investors, despite the company's robust past performance, the next 25 years may be just as beneficial.
NYSE: UL
Key Data Points
Why Unilever will remain a magnificent dividend stock
Home to an array of globally recognized brands such as Dove, Axe, Vaseline, Knorr, and Tresemme, Unilever is one of the most stable businesses on the stock market. Trading with a five-year beta of only 0.4, the company is much less volatile than the broader market. This low volatility, combined with Unilever's hefty dividend payments, makes for an excellent bedrock stock to add to any portfolio focused on generating passive income.
Despite this Steady Eddie nature, however, Unilever brings intriguing upside. Generating 58% of its sales from emerging markets, the company is well-positioned to grow alongside the world's booming middle class.
Furthermore, Unilever is separating from its smallest and least profitable segment: ice cream. This move should boost the company's profitability while increasing free cash flow (FCF).
Historically returning roughly two-thirds of its net income and FCF to shareholders through dividends, Unilever could be on the brink of passing along these savings to shareholders over the coming years.
