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Workers on the National Living Wage need a £1,443 second income to maintain a decent standard of living. That’s according to the National Living Wage Foundation.
The stock market can’t fix everyone’s problems. But for those with spare cash, it might be able to help plug the gap.
A sell-off worth examining
Unilever (LSE: ULVR) shares have had a rough few months. Investors reacted badly to its $44.8bn deal to combine the foods business with McCormick.
The stock fell 5% on the news and various analysts expressed their disappointment. But I see an opportunity worth examining.
The critics make two main points. One is that Unilever brought in a new chief exec to turn the business around, not to sell it. Some investors thought the appointment of Fernando Fernandes as CEO was to reinvigorate growth in the food division. But what were they hoping for?
Kraft Heinz posted a 3.4% organic sales decline in 2025 and guided for a further fall in 2026. Meanwhile, Campbell’s has ruled out 2026 sales growth entirely, with net sales down 4% this year. In short, foods businesses across the board are struggling. Unilever’s brands weren’t waiting to flourish — they were waiting in line with the rest of the industry.
Given this, getting rid of the foods unit doesn’t look like a bad move. At least this way it stops holding back the firm’s other divisions.
The deal argument
On the other side, the deal isn’t what investors were hoping for. Those who wanted to be rid of the foods division find themselves still owning most of it.
The deal is structured as a Reverse Morris Trust. Unilever retains a 9.9% stake, which it intends to sell down gradually, while its shareholders will own 55.1% of the combined entity.
That’s not a clean exit — and with it comes residual exposure to GLP-1 headwinds and consumers trading-down. Which might be exactly the risks the firm was trying to get away from.
But what was the alternative? The market for packaged food assets isn’t exactly thriving right now. I think management might have done as well as possible.
A stock to consider
What remains as Unilever is the more interesting business. Beauty & Wellbeing delivered underlying sales growth of 4.3% in 2025, with Personal Care growing 4.7%.
Free cash flow hit €5.9bn in 2025 at 100% conversion, comfortably covering €4.3bn in dividends. The cash proceeds will also fund €6bn of share buybacks through to 2029.
The dividend yield is close to a 10-year high, but I don’t think it’s a high-yield trap built on deteriorating cash flows. It’s a quality business that’s temporarily out of fashion.
Income investing
Earning a second income through the stock market takes two things. One is cash up front and the other is stocks that can turn that into real returns. The first part is getting harder and harder, especially for workers on the National Living Wage. But for anyone who can find cash to put aside, I think Unilever’s worth a look.
Mechanically, 3,566 shares generate £1,443 in annual dividends. Income investors, in my view, could do a lot worse than considering this one.
Should you invest £5,000 in Unilever right now?
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Stephen Wright owns shares in Unilever.
This story originally appeared on Motley Fool
