Europe vs. the US – what are the biggest dividend investing differences

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With DGI, we focus on companies with nice dividends paid out every quarter. The portfolio of many DGI investors will therefore have a large exposure one 1 continent: the US. Especially when you’re living in the US yourself and you’re more familiar with those companies, this could easily happen. Just count how many of your investments are located there. Here’s some inspiration for alternative solid dividend companies based in Europe.

We’re located in the Netherlands ourself, and focus on demographic variety within our portfolio. Although our portfolio still consists of a lot of companies based in the US. And we are probably not alone. I started out reading a lot of your blogs and found out about companies that I have never heard of. I realized that living 15.000 km apart would mean that we’re used to some very different brands and companies. It should be the same for people living in Asia, Australia or where else on this world.

The big differences

While investing for a few years now, we noticed some differences as it comes to dividends and investing. Like the preference for solid, stable and a bit predictable that a lot of American investors seem to have. Whereas European investors focus less on growth of capital and tend to take more risk.

This difference led to behavior from companies adjusting to their investors needs. Some only invest in companies where a dividend growth of many years has been established. As where the American companies come in. Their success for DGI investors is most often measured in how many years the dividend has increased. Talking about the challengers, contenders & champions. A list made by David Fish.

In Europe, a lot of dividend paying companies don’t focus as much on a solid growth every year, but rather a reflection off the underlying business. This means sometimes theres no pattern at all, and every following year there is the same chance of having an increase of reduction with the same company.

And even if there are companies focusing on growing their dividends every year, some of them only pay out once a year (or every six months). So instead of receiving four times a year with every quarter. You would have to wait another 12 whole months to get the next dividends in your bank account. Personally, this would not hold us back. We currently own stocks of 3 companies that pay out once a year, therefore making may and june our best months for dividend income.

Next is the amount of information available to us, the investors. There is of course the famous CCC list as mentioned before. There is also an Canadian All Star list available somewhere. But there is no real up to date list of European dividend stocks. Something we miss out on, big time. (If there us though and we missed something. Please enlighten us, we’re eager to use it.)

The last difference, and it seems quite important although you almost never hear about it. Is the economical structure of the two continents. In the investment world you hear people and experts say that you have to expose more to European stocks, or that the European market is at an all-time high. The funny thing here, is that there really is no European market. Within Europe, every country has it own, and very different, structure of economics. Look only at the difference between the northern and the southern countries, or how the house market is performing in the Netherlands vs. Ukraine, or the amount of oil in Norway vs. Italy. As I want to point out, the difference within Europe itself are so divers, you can not really speak of 1 market that operates as a whole. America, even divided into separate states, still performs as 1 country and is actuated by 1 overarching government.

European dividend companies

In order to give you guys some insight in European dividend companies. I’ve made a small selection of companies with solid track records and are considered champions within their own sector or segment. The list is made in no particular order. When listed on American stock market, the metrics used are derived therefrom.

  1. AB InBev (NYSE:BUD)ABInBev.png
    Country: Belgium
    Sector: Beverages (Consumer defensive)
    Dividend/Yield: $2.30 / 3.15%
    Years of dividend: 6

    Anheuser-Bush Inbev is the world’s brewing kingpin and sells its beer in more than 100 countries. It’s brand comprises of the well known Budweiser, Corona, Stella Artois, among others. But is also very strong in local craft beers and is still growing this business.  It also produces and distributes soft drinks. Recently it took over their largest rival: SABMiller.
    Anheuser Busch has managed to consistently grow its dividend over the last six years since becoming one firm.

  2. Statoil (NYSE:STO)
    statoil-logo.png
    Country: Norway
    Sector: Energy / Oil
    Dividend/Yield: $0.22 / 5.6%
    Years of dividend: 15
    Statoil is a large oil company in Europe and for two-third owned by the government of Norway. The last few years Statoil has primarily been focused on production growth, turning to international markets
  3. LyondellBasel  (NYSE:LYB)lyondellbasell-industries_416x416
    Country: Netherlands
    Sector:Basic Materials / Chemicals
    Dividend/Yield:   $0.85 / 4.2%
    Years of dividend: 5

    LyondellBasel Industries is a manufacturer of chemicals and polymers, a refiner of crude oil, a producer of gasoline blending components and a developer and licensor of technologies for the production of polymers. And is expanding in key, emerging markets like India. If you have focus on growth and solid financials, with a forward P/E of only 7.7 the stock is considered cheap compared to the industry average of 18.

  4. Unilever  (NYSE:UN)
    Unilever-logo.jpg
    Country: Netherlands
    Sector: Consumer staples
    Dividend/Yield: $0.85 / 4.2%
    Pay out ratio: 68%
    Years paying dividend: 15

    Unilever owns some very strong brands of which almost everyone can relate to, like Dove soap, Hellman’s mayonnaise, Lipton, Ben & Jerry’s, just to name a few. It’s no surprise that every day, two billion people use a Unilever product.
    For investors, that has helped Unilever get serious about its dividend. The firm moved to a quarterly payout back in 2010 and started returning excess cash back to investors as dividends. Since the switch, UL has managed to grow its payout 34% and currently yields a healthy 2.9%.
  5. Novartis  (NYSE:NVS)

    novartis1.jpgCountry: Switzerland
    Sector: Healthcare
    Dividend/Yield:  $2.72 / 3.4%
    Pay out ratio: 77%
    Years paying dividend: 10

    Novartis AG is engaged in the research, development, manufacturing and marketing of healthcare products and pharmaceuticals. With strong positions in multiple key health-care businesses, Novartis is well-positioned for steady long-term growth. It’s a steady dividend player, although the current pay out ratio looks a bit high. 

  6. Munich RE  –Münchener Rück (BIT:MUV2)

    Munich-RE-Jobs-in-Ghana.png
    Country: Germany
    Sector: Financial / Insurance
    Dividend/Yield:    €8.25 / 4.5%
    Pay out ratio: 41%
    Years paying dividend: 13

    Munich RE provides insurance and reinsurance services. It is operating in a difficult market environment, and its struggling primary insurance unit has been a burden on consolidated returns. With a P/E of only 10.6 and looking at the future cashflow, this company is currently considered at fair value.

Divnomics holds positions in LyondellBasel & Munich RE.

Sources: Google Finance,  Morningstar.com & Investorplace.com


Disclaimer: Information expressed at this site is for entertainment or information uses only and are not to be taken as financial advice. We are not licensed investment advisors or investment professionals. Please perform your own due diligence or seek out professional advice before undertaking any action.

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8 thoughts on “Europe vs. the US – what are the biggest dividend investing differences

    • Hey there, thanks for the comment and the info. And nice to see a fellow Dutch investor here!
      I found the list as well, but noticed it was last updated somewhere in 2015. I asked the writer if it was still in his planning to work on it, but got no reply (yet).
      Good luck with your next steps in the stock market!

      Like

    • Hi Bert,
      Your welcome! Really like Unilever too, but it’s seems to be a stock which is always highly valued. As alternative, Nestle might also be interesting.

      We only own 2 companies ourselves of this list, Munich RE and LYondellBasel. We almost bought AB Inbev and Novartis, but never closed the deal.

      Like

  1. Hi, i stumbles across your site in the MMM site, starting to read , looks interesting. Personally i’m leaving in Spain, and would like to start investing DGI, can i ask what broker are you using ?

    Like

    • Thanks for stopping by! DGI is a very interesting way of investing in my opinion.

      We’re currently using DeGiro as our broker. Before that we had Rabobank, but we changed over because of the high transaction fees.

      Like

      • Great, didn’t know if they were. Check out the 2 different kinds of accounts they have though because they have both their pros and cons. Hope you can find something that fits your needs!

        Like

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