Dividend shares could be a nice supply of passive revenue. However buyers should be cautious when choosing them as weaker companies typically scale back or cancel their payouts.

Right here, I’m going to spotlight a FTSE 100 dividend inventory I maintain in my portfolio that has an excellent long-term observe file in terms of shareholder payouts. I believe this inventory might probably pay me passive revenue for the subsequent twenty years.

A constant dividend payer

The inventory in focus is Unilever (LSE: ULVR). It’s a shopper items firm that owns a spread of well-known manufacturers together with Dove, Domestos, Knorr, and Hellmann’s.

The yield on this inventory isn’t tremendous excessive. Presently, it’s about 3.4%. However that doesn’t hassle me. Over the past decade, buyers have obtained general returns (share price positive factors plus revenue) of about 9% a yr, which is first rate (and properly forward of FTSE 100 returns).

What I like about this inventory is that it’s a really constant dividend payer. It is a firm that has paid its buyers some revenue yearly for over 30 years.

I additionally like the truth that the payout’s frequently rising (that is essential if an investor needs to beat inflation). If this yr’s dividend forecast of 185 euro cents per share proves to be correct, the payout could have been elevated by about 4.4% a yr over the past decade.

It’s value noting that if the corporate was to proceed growing its payout at this charge for the subsequent 20 years, buyers may very well be a yield of round 8% on at this time’s share price. That’s the facility of rising dividends.

Extra revenue on the horizon

Now, in investing, previous efficiency is rarely indicative of future efficiency. So there’s no assure Unilever will proceed to be such a dependable money cow for long-term buyers like myself.

However I consider this inventory will proceed to reward me with regular revenue within the years forward. There are a number of the explanation why.

One is that Unilever’s manufacturers – that are bought in supermarkets and comfort shops globally – are each very well-known and trusted by shoppers. This recognition and belief – the results of a long time of promoting – is a serious aggressive benefit and may defend its income (it additionally offers the corporate pricing energy).

One more reason I’m optimistic about future revenue is that the corporate has important publicity to the world’s rising markets (about 50% of its gross sales). This offers a progress driver – which is important when investing in dividends shares for the long run – as incomes in these markets are rising and shoppers are frequently upgrading to branded merchandise corresponding to these provided by Unilever.

Dependable money circulation

There are a couple of dangers to the funding case, after all. One is that new manufacturers might seize market share and gradual the corporate’s progress. Whereas a whole lot of Unilever’s manufacturers have been widespread for many years, it’s turning into simpler for brand new shopper manufacturers to seize market share due to social media.

One other danger is a serious recession or interval of financial weak point. This might lead shoppers to ‘trade down’ to cheaper manufacturers.

All issues taken into consideration nonetheless, I’m optimistic that the corporate can proceed to reward buyers with stable returns. In my opinion, this inventory is unquestionably value contemplating if an investor’s in search of dependable passive revenue.