I’m keen to buy this top FTSE 100 income and growth stock in March

The consumer goods giant Unilever (LSE: ULVR) has been struggling lately, which has surprised me. For years, I was considered the most solid stock in the FTSE 100with the exception of the blind spirit Diageo. But lately it has been under fire on many fronts.

Post-Covid supply chain disruptions and the global economic slowdown saw earnings per share decline for three consecutive years, and by an average of 12% a year. The group has received a £50bn takeover bid GlaxoSmithKline the consumer health arm is also casting a shadow.

FTSE 100 winners become losers

Unilever’s management could then stumble into a culture war. Critics claim CEO Alan Jope is too busy worrying about unconscious bias training and failing to show enough concern about the embattled bottom line.

The company has also attracted the attention of activist investor Nelson Peltz, who reportedly wants to destroy the company. One option is said to spin off Unilever’s food and beverage business. Things are a lot calmer now that Peltz is on board.

Unilever shares peaked at 5,333 in September 2019, then fell sharply. At this time last year, they were trading at just 3,400, down 36%. That was a shock fall from grace after years of steady, seemingly unstoppable growth.

No stock goes up in a straight line forever. Therefore, I prefer to buy companies when the stock price is going down rather than going up. You never know what’s coming, but reduce the risk of overpaying.

I should have bought Unilever a year ago. The stock price is up more than 20% since the dark day. But there are still good reasons to buy this March.

First, it’s still relatively cheap, by its own standards. I’m used to Unilever stock trading at 24 times earnings, but now it’s trading at just 18.5. This is good value for a quality global company.

Good value by your own high standards

The dividend yield is slightly better than before, although it is hardly spectacular at 3.7% per annum. However, it is guaranteed 1.7 times by earnings, and is expected to hit 4.2% next year. Unilever management has treated dividend investors well in the past, so I would expect further progress.

Unilever is considered a defensive stock, as profits should continue to rise when they fall. Consumers continue to buy cheap essentials such as soap, shampoo, toiletries, and washing powder during the recession.

Accordingly, this month’s figures show annual sales growth beating expectations at 9%. Even better, Unilever has pricing power, which allows it to increase costs to customers. During the year, prices increased by 11.3% with little impact on sales.

That should prove important going forward, as inflation may prove stickier than we think. Management expects “strong underlying sales growth” in the next year. It’s good enough for me.

I may have missed the chance to snap up Unilever at a true bargain price, but I still think it looks good value for a long-term, buy-and-hold investor like me. It’s on the buy list.