Holland-based Unilever Worth a Good, Hard Look

I raised some cash last week by selling some shares in one of my old employers for diversification reasons. I added slightly to my position in Unilever ADRs (UN) for the following reasons:

- The current p/e is 18 vs. depressed 2005 earnings of $1.36. The p/e versus next year is 14.9 and 13.9 vs. 2007. This compares favorably to the current European food favorite Nestle (NSRGY.PK) which has a trailing p/e of 21 and trades at a similar premium to future earnings as well.
- Unilever has been a perennial under-performer in Europe and management is starting to get the message that changes have to be made. This means there is lots of room for improvement in operations and capital restructuring.
- Food companies are in favor right now and I think this will continue as global inflation continues to surprise.
- Diversifies nicely against my portfolio which is pretty heavy in financials.
- A yummy 4% dividend yield (that is well covered with cash flow).
- I want to diversify my US Dollar holdings by owning more stable companies outside the US.
- They own Ben and Jerry's Ice Cream. Although the brand makes up a tiny part of the companies earnings, I just can't help but feel better owning this company.

One warning about dividends: European companies dividend payments are less frequent and more volatile than what most US investors are used to.

UN 1-yr chart:

Disclosure: I own Unilever N V ADR (UN). I also own Nestle.

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