Bunzl’s record-high stock price proves why boring REALLY is the best
Distribution and outsourcing giant Bunzl has been labelled ‘boring’, but for investors the company’s growth tells a different story.
Shares hit a record high last week after the distributor of everything from food packaging to toilet paper raised its dividend and said it would likely make more profit than previously expected.
Although not a household name, Bunzl sells products to companies that many Britons use every day.
That includes supplying disposable cups to cafes, packaging to supermarkets, hard hats to construction workers and bandages to hospitals. The nature of the behind-the-scenes business has earned the FTSE 100 company the nickname ‘boring Bunzl’.
According to experts, the company has shown “why boring can be best” by distributing products that customers can’t live without.
In focus: Bunzl’s share price is up 25 percent in the past year and 76 percent in the past five years.
The stock price has risen 25 percent in the past year and 76 percent in the past five years, and analysts predict it will rise even further.
The company last week touted 31 consecutive years of dividend growth when it announced an interim half-year dividend of £21.1 per share – up 10.4 per cent on a year earlier – with shares closing at £35.40 on Friday evening.
And the distribution giant announced a £250m share buyback programme, raising its profit and revenue forecasts for next year.
Bunzl is based in the United Kingdom, but its origins lie in a haberdashery in present-day Slovakia, founded in 1854.
In 1938, the company relocated to London as Europe headed towards World War II. In 1957, the company was listed on the City List. Bunzl’s focus has shifted over the decades to include the production of cigarette filters, crepe and tissue paper, and the production of fibres, pulp, paper, building materials and plastics.
Growth has been fuelled by acquisitions – 210 in the past 20 years – and Bunzl now operates in 33 countries and employs 24,500 people.
Susannah Streeter, head of money and markets at investment platform Hargreaves Lansdown, said: ‘The success of Bunzl shows how our need for everyday but essential items can be turned into a stream of profitable income. From food packaging to cleaning chemicals and safety equipment, this is a world away from the trendsetting products sold by influencers.
“They may sound boring, but they are products that customers can’t live without.”
Russ Mould, investment director at broker AJ Bell, added: ‘The demand-driven nature of the products the company provides can protect the business from the vagaries of the economic cycle and also provide Bunzl with pricing power, a key ingredient in times of inflation.’
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