The consequence of a high payout ratio is made apparent when the parent company Unilever owns more than 60% of the company. Unfortunately, the problem stretches further than just a high dividend payout ratio and a high P/E ratio. This is a losing trade for the retail investor, who loses out a portion of his EPS in royalty expenses. An investor could invest in the parent company Unilever listed on the London Stock Exchange. Thus, it is prudent for the retail investor to avoid these overpriced units favouring their parent companies.

Source: The Hindu August 15, 2021 17:06 UTC