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Evenlode: 10 sustainable dividend stocks

Evenlode's Ben Peters and Chris Elliott highlight 10 stocks dotted across the globe which they believe have sustainable dividends.

Income opportunities at attractive valuations  

The global economic environment remains patchy, with growth in some regions offset by difficulties in others.

As a consequence, stockpickers have to work extra hard to find investment opportunities. 

‘It’s still possible to find high quality businesses that are trading at attractive valuations – and pay a sustainable dividend yield,’ Citywire AA-rated Ben Peters (pictured left) and Chris Elliott (right) said in Evenlode Investment’s annual global dividend sustainability report for 2018.

Against this backdrop, the pair are looking for investments across the globe where potential growth can deliver an attractive income stream and strong total returns over the next few years.  

With this in mind, they highlight 10 stocks which meet their investment criteria. 

 

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Income opportunities at attractive valuations  

The global economic environment remains patchy, with growth in some regions offset by difficulties in others.

As a consequence, stockpickers have to work extra hard to find investment opportunities. 

‘It’s still possible to find high quality businesses that are trading at attractive valuations – and pay a sustainable dividend yield,’ Citywire AA-rated Ben Peters (pictured left) and Chris Elliott (right) said in Evenlode Investment’s annual global dividend sustainability report for 2018.

Against this backdrop, the pair are looking for investments across the globe where potential growth can deliver an attractive income stream and strong total returns over the next few years.  

With this in mind, they highlight 10 stocks which meet their investment criteria. 

 

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Please sign in or register to comment. It is free to register and only takes a minute or two.

Cisco

'Cisco is the global market leader in the technologies that underpin the internet.

'With the advent of cloud computing, it has expanded into providing security services for networks, the cloud and the internet of things.

'This includes the ability to detect malicious threats in encrypted internet traffic. Cisco has a very strong balance sheet with $35 billion (£25.4 billion) of net cash and twice covers the 3.4% yield.' 

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Givaudan

'Givaudan is the world’s largest manufacturer of fragrance and flavour products. Selling into the food and cosmetics market and headquartered in Switzerland, the company’s formulations are custom made and often the defining feature of a product.

'This gives the firm great integration into its customers’ supply chain, as once the flavour of a product has been established as a winning formula, the manufacturer is unlikely to want to change the supplier.' 

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Johnson & Johnson

'Often associated with its consumer products division, with iconic brands such as Listerine and Neutrogena, Johnson & Johnson is predominantly a pharmaceuticals and medical devices company.

'The company’s Janssen pharmaceutical division generates 46% of revenues and has a broad portfolio of drugs treating a range of disease areas.' 

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Kone

'Finnish company Kone is one of the world’s largest elevator manufacturers in a consolidated market, and the leading provider of new equipment in China.

'Customers need effective ways of getting people around their buildings, particularly for large scale projects, and want to use the best providers of people flow solutions.

'There is a growing regulatory imperative for ongoing maintenance, and services account for 45% of Kone’s revenue.' 

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Paychex

'Paychex is a US-focused provider of human resources services to small and medium-sized businesses. A little over half of revenues are derived from payroll outsourcing, clearly an important function for any business and a task for which smaller firms are very willing to utilise a specialist.

'The other part of the business is other human resources services, such as pensions administration, and management of workplace policies. Once integrated into a client’s business, renewal rates are extremely high. The cash flows that back the 3.1% yield are very stable as a result.'

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PepsiCo

'Something of a misnomer, Pepsico derives only 12% of sales from its eponymous drink. The company also owns a wide range of food and beverage brands including Tropicana, Lays, Doritos, Quaker Oats and Cheetos.

'The majority of revenue comes from North America, and 40% from the rest of the world and 22 of PepsiCo’s brands generate more than $1 billion of sales annually. The company’s portfolio also boasts four of the top 10 retail brands across all categories.' 

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Relx

'Relx is an Anglo-Dutch media conglomerate operating across a number of different sectors. The academic publishing business Elsevier disseminates 16% of the world’s scientific articles. Risk and business analytics provides services such as risk analysis tools to insurers, and anti-money laundering tools to banks.

'The legal division operates the LexisNexis database for lawyers, which operates in a duopoly with Thomson Reuters’ Westlaw. Finally, the firm’s exhibitions business is the largest in the world, operating ‘go to’ events that are often monopolies in their given industry.' 

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Thomson Reuters

'Another media conglomerate, this time Canadian. In addition to being in a duopoly in the legal space with Relx, Thomson Reuters also operates in finance, risk management and tax and accounting, as well as owning the Reuters news agency.

'The financial segment provides data and terminals to market participants, as well as some of the plumbing for the foreign exchange market.' 

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Unilever

'Unilever’s consumer products are instantly recognisable to the 2.5 billion people who use them globally every day.

'Selling products from Dove to Domestos, Lifebuoy to Lipton, this diversified consumer goods giant has a history stretching back to the 1880s. Some 55% of revenues are from emerging markets, with many brands present in their local market for decades.' 

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Wolters Kluwer

'Wolters Kluwer is a Dutch information, software and services company servicing the legal, tax, accounting, finance, risk and healthcare sectors. Its products and services help healthcare professionals to make decisions, accountants to manage compliance and businesses manage their legal affairs.

'Knowledge and content in the relevant sectors combined with increasingly cloud-based delivery enable Wolters Kluwer’s products to become deeply embedded in its customers’ operations and 78% of revenues come from recurring sources such as subscriptions.' 

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