I love ice cream, chocolate and coffe. To consume and to invest in (drawing by the author)
In my view Nestlé, the Swiss-based world largest foodmaker is one of the very view companies being indispensable for my portfolio. For me, it is an investment for life. In the last decades, it offered higher returns on equity which led to even better long-term wealth creation than its competitors such as Unilever or General Mills (of course each of them too has been excellent as long term holding). Have a look at the Nestlé’s brands list and its financial fundamentals and you will see, this company plays in a league of its own.
Like most of the consumer staple companies, it is rare that Nestle stocks are really cheap. Of course not, intelligent investors know the quality of that company. Embrace stock market corrections as they provide rare opportunities to buy shares of a wonderful company at a lower price.
Nestlé has increased its dividends for decades. Now imagine, that an investor reinvested the dividends every year to benefit of the magic of the compound effect. Over time, wonderful things happen to the patient investor.
In 2009, when I entered in my position in Nestlé, the company paid out a dividend of CHF 1.60 per share (the Swiss withholding tax on dividends is 35 %, if there is a double taxation treaty with the country of the investor, twenty percentage points can be reimbursed to that investor to lower the tax rate to 15 %). In 2016, the company distributed CHF 2.25 per stock. The dividend yield at costs of my investment has increased handsomely.
Nestlé stocks give my portfolio stability and provide a steadily increasing stream of fresh cash ready to be invested. That cash can also be used to buy stocks of other companies and diversify my portfolio. But as said, in my view there are very few alternatives offering similar quality.
Disclaimer
You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
I definitely agree that Nestlé is a great dividend company. Though I don’t current own a position in it, I would like to. Btw, the drawings are original and really cool!. Keep it up!
Hi Graham
Yes, Nestlé is just an amazing company, I can think of very few businesses showing such earnings quality, financial discipline, consistency, great track record in acquiring/integrating companies and having built such a strong brand portfolio over the last decades. In my view, only outstanding companies such as PepsiCo, Reckit Benkisser, Johnson & Johnson and L’Oréal play in the same league like Nestlé.
I have never seen Néstle really going on sale, but it gets kind of “unpoplular” from time to time with the investor community leading to more attractive entry prices.
Glad you like my drawings, I will definitively keep it up.
Thanks for your commentary and for stopping by.
Cheers
Nestlé is the best long term investment that there is. They don’t have to re-invent a new i-Phone every year, people are hungry on a daily basis and food taste of emerging markets is slowly adjusting to support the Swiss giant further. On top of that, it’s a perfect global inflation and currency hedge. You don’t have to worry about CHF, USD, EUR, JPY or CNY – the company itself is actually a branded and well diversified mutual-fund in local food brands all over the world. Great post and yes, being from Switzerland ourselves, we are happy Nestlé investors for decades ourselves. They’ll keep you in great financial shape!!! Awesome post!
Hi Matt
Glad you like my blogpost.
Yeah, there’s so much to like about Nestlé. Happy to have you as fellow shareholder in that wonderful business!
Thanks for stopping by and commenting.
Cheers
I don’t have a position in Nestle but it is the exact type of stock I love. Strong dividend history, a diverse portfolio of popular brands, global reach & products that I actually consume!
Hopefully, I can buy in soon at a reasonable price.
Hi RichestManInLondon
Nestlé is an excellent company to put on the watchlist. You are right, there’s no need to rush in. Just remaining patient will be extremely rewarding, you’ll see, sooner or later opportunity will ariso where you can initiate your position at an attractive price.
All the best and thanks for stopping by and commenting!