Unilever Shares Decline After Strong Rally
In March 2020, when many companies saw downturns due to the pandemic, Unilever shares (LON:ULVR) were valued at 3,854p per share. By the end of August they were up by nearly 35% to 5,196p.
However, as the road to recovery became more apparent, investors began looking towards more “exciting” high-growth stocks.
Investors deserted Unilever for cyclical companies such as miners, where they anticipated higher returns as the economy bounced back from the coronavirus pandemic. In February 2021, Unilever shares had fallen to 3,733p per share.
This has caused the Unilever share price to fall well below its 50-day (yellow) and 200-day (blue) averages, as seen below. In addition, the company’s RSI is at the 40 level having dipped to 30, suggesting its shares may be oversold.
These technical analysis indicators could point towards the possibility that the Unilever share price is set to reverse recent declines in the coming months.
Dividends
Unilever’s dividend remained in place throughout 2020, rising in line with yearly increases. The total dividend for the year came in at €1.73 per share, up from €1.66 and €1.58 in 2019 and 2018. The company held its dividend at 2.9%, while confirming its intention to pay a growing dividend moving forward.
A Stable Option
In the event of a downturn, investors seek “defensive stocks” in their portfolio to help weather the storm. Unilever, a company which sells an assortment of home care and personal care products, is well positioned to maintain its revenue levels during periods of uncertainty.
While some Unilever products – food services and ‘prestige beauty’ – took hits during the pandemic, many, such as household care and cleansing, showed resilience. Unilever’s turnover fell by only 2.4% during 2020, mainly due to the impact of adverse currency fluctuations, while its underlying sales growth was 1.9%, showing the company’s resilience. Over the same period, Unilever’s underlying operating profit decreased 5.8%, but increased by 0.7% at constant exchange rates.
