As the war in Ukraine rages on, European companies are facing a tough macroeconomic environment with global interest rates rising, a strong dollar weakening the euro, and supply chain crunches. Meanwhile, the FTSE 100 Index is only down 2.62% year-to-date, compared to the S&P 500 which is down around 20% year-to-date.
Although a strong dollar can make imports cheaper for American consumers, multinational firms that have a large chunk of their sales in the U.S. and earn income in dollars will see gains in the dollar translate to gains on their balance sheets. With the U.S. economy facing headwinds of its own, it may not be a bad idea to diversify one's portfolio from systematic risk by investing in European stocks.
Here are three European firms with blocks of their sales revenue relying on the United States, as consumer goods and plastics play a large part in U.S. imports.
LyondellBasell Industries N.V. LYB is offering a dividend yield of 5.71% or $4.76 per share annually, using quarterly payments, with a strong track record of increasing its dividends for eight consecutive years. LyondellBasell Industries is a petrochemical producer with operations in the United States, Europe, and Asia and is the world's largest producer of polypropylene and is also a major producer of polyethylene and propylene oxide.
In the third quarter, approximately $440 million was reinvested in the businesses and more than $550 million was returned to shareholders through the quarterly dividend and share repurchases.
Unilever PLC UL is offering a dividend yield of 3.85% or $1.79 per share annually, using quarterly payments, with a modest track record of increasing its dividends for two consecutive years. Unilever is one of the world’s largest consumer goods companies and has more than 400 brands in over 190 countries with its brands including Dove, Axe, Hellmann's mayonnaise, Ben & Jerry’s, Lipton teas, LUX, TRESemme to name a few.
In the third quarter, Unilever’s sales growth accelerated by 10.6% year-over-year with its three best segments being — Beauty and Wellbeing up 24.4%, Home Care up 22%, and Ice Cream 20.8%. The company raised its expected sales growth for the full year 2022 to above 8%.
L'Oreal S.A. LRLCF is offering a dividend yield of 1.58% or $5.04 per share paid annually, with a decent track record of increasing its dividends for three consecutive years. L’Oreal was founded in 1909 by Eugene Schueller when he developed the first harmless hair colorant, and is now the world's largest beauty company. L'Oréal is a global firm, with 32% of its revenue sourced from Europe, 25% from North America, 31% from North Asia, 7% South Asia/Middle East/Africa, and 6% Latin America.
For the first half of the year reported on July 28, 2022, L’Oreal had sales of EUR $18.4 billion with earnings per share growth of 31% and its operating margin increased by 70 bps to 20.4%.
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