HUL Vs Dabur Vs Colgate Palmolive; 275-2900% Dividend From Nov 1-8; Which Major FMCG Stock To BUY?

Three major FMCG companies are set to reward investors with dividend payout ranging from as low as Rs 2.75 per to as high as Rs 29 per share. Holding large-cap status, these companies are Dabur India, Colgate-Palmolive, and Hindustan Unilever (HUL). These stocks will turn ex-date for their upcoming dividends during the trading week from November 4-8. Which top FMCG stocks to buy?

Colgate Palmolive Dividend:

The first to turn ex-dividend is Colgate on November 4th. The personal care products maker will pay interim dividends of up to 2,400% worth Rs 24 per share. The record date to determine eligible shareholders is fixed on November 4th.

In FY24, the company paid dividends of a whopping 5,800% worth Rs 58 per share. Currently, it has a dividend yield of 1.89%.

As of November 1, 2024, Colgate's stock price is at Rs 3066.10 apiece, marginally up on BSE with a market cap of Rs 83,393.52 crore. The company has offered a return on equity massively at 88.88%.

IIFL Securities suggests adding the stock to its portfolio, despite lowering its sales estimates target.

In its latest note, IIFL said, "On the back of this result and anticipated headwinds in the near term, we downgrade our sales estimate for FY25-27 by ~1%. With margin pressure likely to be sustained, we have downgraded our EBITDA estimate for FY25-27 by ~6%. We build in margin contraction of ~100bps in FY25. After factoring in one-time credit of interest on income tax refund in 2QFY25, we cut our EPS estimate for FY25 by ~3% and for FY26/27 by ~6%.

In the near term, the brokerage expects the top-line as well as bottom-line growth to moderate on the back of demand slowdown (especially in urban areas) and increased promotional intensity by the company. On the back of this result, it said, "We downgrade our EPS estimates for FY25-27 by ~3-6% and maintain ADD with a target price of Rs3250."

Hindustan Unilever (HUL) Dividend:

The largest FMCG stock, HUL is going to reward investors with dividends up to 2900% valuing Rs 29 per share. The total includes an interim dividend of 1900% worth Rs 19 per share and a special dividend of 1000% valuing Rs 10 per share. The record date to determine eligible shareholders is fixed on November 1.66%.

In FY24, the company paid up to 4,200% dividends valuing to Rs 42 per share.

HUL's share price stood at Rs 2538.35 apiece, with a market cap of Rs 5,96,408.50 crore as of November 3, 2024. The return on equity is at 19.96%.

Emkay Global said in its note, "We retain BUY on HUL, as we continue to see enhanced business execution. The relatively weaker show in Q2 (sales/EBITDA/adjusted PAT growth at 3%/3%/2%, respectively) is a factor of the tough external setting (inflationary raw material environment, weakness in urban demand). The portfolio (Home Care and Beauty & Wellbeing) that represents 3/5th of the sales and 2/3rd of the EBIT is in good health,t with topline growth in a high single-digit (with mid-to-high single-digit volume growth) and margin expansion."

Further, the brokerage said, "The inflationary setting has a bearing on the performance of the remaining portfolio. Management cautioned about the near-term demand setting but is optimistic about the long-term opportunity. Factoring in the near-term stress, we reduce FY25-27E earnings by 4-5%. Our new Sep-25E TP is Rs3,225 vs Rs3,400 earlier."

Dabur India Dividend:

This FMCG company is going to deliver dividends up to 275% worth Rs 2.75 per share, and to determine the eligible shareholders for the same, the record date is fixed on November 8, 2024. This will also be its ex-date. In FY24, the company paid up to 550% worth Rs 5.5 dividend per share. The current dividend yield is at 1.01%.

At present, Dabur's share price is at Rs 543.10 apiece, with a market cap of Rs 96,254.23 crore. The return on equity by Dabur is healthy at 20.91% as of November 1, 2024.

On the valuation, brokerage Motilal Oswal said, on Dabur that there are no material changes to its FY25E/FY26E estimates. It said, "DABUR mitigated the impact of inflationary pressures through disciplined cost control, operational efficiencies, and judicious price increases. With a broader distribution reach (to ~0.12m villages and ~7.9m outlets), increased direct penetration (~1.4m outlets), and extensive presence/categorical leadership in the rural market, DABUR is better positioned to capitalize on the rural consumption trend compared to its peers. "

Also, Motilal's note said, "The operating margin, which has been hovering around the 20% band over the last 8-9 years (unlike its peers that have experienced expansions), also has room for expansion in the medium term."

Moreover, the brokerage said, "With external drivers remaining consistent, we view the recent stock price correction as an opportunity to be constructive on the stock. Once the company's growth trajectory improves, we expect a re-rating potential in the stock. We reiterate our BUY rating on the stock with a TP of INR700 (premised on 50x P/E on Sep'26)."