In this article, we discuss 10 best European dividend stocks to buy now.
After a pandemic-related slump in global dividend payments, companies around the world raised and reinstated their dividends to a record level. Dividends in Europe and the US fell by $100 billion in 2020 but recovered as soon as the market regained its footing last year. This year’s returns of European dividend stocks show their superior performance to their counterparts. The AlphaDEX European Dividend Index, which tracks the performance of Europe-domiciled dividend companies, reported a decline of 18.5% in 2022 so far, versus a 21.7% drop in the S&P 500, as of the close of October 21.
In its second quarter 2022 global dividend report, Janus Henderson Investors mentioned that the UK and Europe were the main driving forces in the global payout surge. Dividends in Europe grew by 28.7% on an underlying basis, amounting to $165.8 billion. The report also mentioned that special dividends paid by European companies also grew by 2.5% in Q2, from the previous quarter. Another report by Forbes cited the data of Henderson International Income Trust, which mentioned that dividends from UK companies will head for record payments this year for the first time since 2008. This growth will be attributed to rising oil prices that have significantly contributed to the growing revenues of many companies in the FTSE 100. With the global surge in dividend stocks this year, companies like Colgate-Palmolive Company (NYSE:CL), PepsiCo, Inc. (NASDAQ:PEP), and Merck & Co., Inc. (NYSE:MRK) are gaining ground among investors due to their solid dividend policies.
According to analysts, Europe’s recovering stock market has a lot to offer to investors in terms of dividends and capital gains. Earlier this year, Goldman Sachs analyst Guillaume Jaisson spoke to Bloomberg about European dividend equities. He said that high-yielding stocks in Europe have started to outperform as they are less sensitive to rising bond yields. He further mentioned that dividends in Stoxx Europe 600 Index are expected to grow by 10% this year, mainly driven by energy and bank stocks.
Copyright: samranwara31 / 123RF Stock Photo
Our Methodology:
The stocks mentioned below are European businesses that pay dividends to shareholders. These companies have sound financial health and strong balance sheets to fulfill their shareholder obligation. The stocks are ranked according to their dividend yields, as of October 22.
10 Best European Dividend Stocks to Buy Now
10. ASML Holding N.V. (NASDAQ:ASML)
Dividend Yield as of October 22: 1.44%
ASML Holding N.V. (NASDAQ:ASML) is a Dutch multinational company and is one of the world’s leading manufacturers of chip-making equipment. The company specializes in the production of lithography machines that are essential in chip manufacturing.
In its recently-announced Q3 2022 earnings report, ASML Holding N.V. (NASDAQ:ASML) posted revenue of €5.8 billion, up 10.2% from the same period last year. Its net bookings in the quarter amounted to over €8.9 billion. During the quarter, the company repurchased €1 billion worth of shares under its current shares buyback program. For FY22, it expects to generate €21 billion in sales.
ASML Holding N.V. (NASDAQ:ASML) currently pays a quarterly dividend of €1.37 per share and has a dividend yield of 1.44%, as of October 22. The company can be a good addition to dividend portfolios in addition to some of the best dividend stocks like Colgate-Palmolive Company (NYSE:CL), PepsiCo, Inc. (NASDAQ:PEP), and Merck & Co., Inc. (NYSE:MRK).
In October, New Street upgraded ASML Holding N.V. (NASDAQ:ASML) to Outperform with a €770 price target. The firm expects the company to generate solid revenues in the upcoming quarters.
At the end of Q2 2022, 47 hedge funds tracked by Insider Monkey owned stakes in ASML Holding N.V. (NASDAQ:ASML), up from 46 a quarter earlier. These stakes have a total value of over $3.6 billion. With roughly 4.6 million shares, Fisher Asset Management was the company’s leading stakeholder in Q2.
Baron Funds mentioned ASML Holding N.V. (NASDAQ:ASML) in its Q2 2022 investor letter. Here is what the firm has to say:
“ASML Holding N.V. designs and manufactures semiconductor production equipment. It specializes in photolithography equipment, where light sources are used to photo-reactively create patterns on wafers that become printed circuits. ASML is the dominant leader across all types of lithography but, most importantly, is the only company selling equipment for extreme ultra-violet (EUV) lithography, the latest generation technology.
Indeed, because of the stalling out of Moore’s Law, advanced lithography of larger and multi-patterned silicon chips has been critical for leading-edge chip manufacturing and continued improvement in semiconductor chip performance over time. The company is well positioned to continue growing above industry rates as it rapidly adds capacity across its entire business to meet rising industry demand, especially from leading-edge customers continuing to invest to stay ahead of their competitors and drive chip performance forward.
Additionally, the introduction of high-NA EUV technology in the middle of the decade will add another leg to the growth opportunity.”
9. Novo Nordisk A/S (NYSE:NVO)
Dividend Yield as of October 22: 1.54%
Novo Nordisk A/S (NYSE:NVO) is a Danish multinational pharmaceutical company that has production facilities in over nine countries. In October, Barclays raised its price target on the stock to DKK 850 and maintained its Overweight rating on the shares. The firm appreciated the company’s performance over past quarters despite the current market.
In the first half of 2022, Novo Nordisk A/S (NYSE:NVO) reported a 25% growth in its revenues from the same period last year at 83.3 billion DKK. The company’s obesity care gained 28% year-over-year at 72.7 billion DKK. It also reported strong cash generation during the quarter, with an operating cash flow of 24 billion DKK and a free cash flow of 21.3 billion DKK.
Novo Nordisk A/S (NYSE:NVO) pays dividends to shareholders twice a year. It currently pays an interim dividend of $0.411 per share, with a dividend yield of 1.54%, as recorded on October 22.
As of the close of Q2 2022, 32 hedge funds in Insider Monkey’s database owned stakes in Novo Nordisk A/S (NYSE:NVO), compared with 31 a quarter earlier. These stakes have a consolidated value of over $4.4 billion.
Baron Funds mentioned Novo Nordisk A/S (NYSE:NVO) in its Q2 2022 investor letter. Here is what the firm has to say:
“We added to our position in Novo Nordisk A/S, a leading global biopharmaceutical company headquartered in Denmark that specializes in treatments for diabetes, obesity, and other chronic diseases. We wrote about Novo Nordisk in last quarter’s letter. We continue to believe Novo Nordisk’s diabetes and anti-obesity franchise will drive attractive revenue and earnings growth for many years to come. We think both Novo Nordisk and competitor Eli Lilly and Company(which we also own in the Fund) can be successful in these large markets.”
8. Diageo plc (NYSE:DEO)
Dividend Yield as of October 22: 2.32%
Diageo plc (NYSE:DEO) is a London-based multinational alcoholic beverage company that operates from 132 sites around the world. The company is the major distributor of Scotch whisky and other related beverages. It is one of the best dividend stocks on our list as it has raised its dividends consistently for the past 25 years. Moreover, in the past five years, the company has raised its dividends at a CAGR of 4.2%. It currently pays a semi-annual dividend of $2.2775 per share for a dividend yield of 2.32%, as recorded on October 22.
In the second quarter of 2022, Diageo plc (NYSE:DEO) reported revenue of £15.4 billion, which showed a 21.4% growth from the same period last year. The company’s operating cash flow also showed growth by £300 million at £3.9 billion and its free cash flow for the quarter stood at £2.8 billion.
Street analysts presented a positive outlook on Diageo plc (NYSE:DEO) due to the company’s solid earnings in 2022. In August, both Berenberg and UBS lifted their price targets on the stock to 4,160 GBP and 4,500 GBP, respectively. UBS also held a Buy rating on the stock.
At the end of June 2022, 22 hedge funds in Insider Monkey’s database reported owning stakes in Diageo plc (NYSE:DEO), up from 21 in the previous quarter. These stakes are collectively valued at over $887.3 million. Among these hedge funds, Ako Capital owned the largest stake in the company in Q2.
ClearBridge Investments mentioned Diageo plc (NYSE:DEO) in its Q2 2022 investor letter. Here is what the firm has to say:
“Diageo is a leading global distiller and brewer which addresses the large ($500 billion-plus) and fragmented market for spirits. With its portfolio of premium products, we see Diageo as a steady compounder poised for sustained, above industry growth. The company’s margins remain below pre-COVID levels in a number of geographies and should continue to recover as channels reopen, though we also see opportunities for consistent margin expansion beyond this period of rebound. The spirits category is not immune to weaker consumer spending nor inflation; however the majority of Diageo’s profits are from the U.S. market, which has historically been more resilient. Additionally, the company has a number of margin levers to help combat rising input costs.”
7. ABB Ltd (NYSE:ABB)
Dividend Yield as of October 22: 3.20%
ABB Ltd (NYSE:ABB) is a Swedish-Swiss multinational automation company that utilizes software for its robotics and automation portfolio. In Q3 2022, the company reported a 4% year-over-year growth in its orders at $8.2 billion. The company’s operating income came in at $708 million and its total revenue stood at $7.4 billion. Its cash position also remained stable with $791 million in operating cash flow.
ABB Ltd (NYSE:ABB) pays annual dividends to shareholders. It currently pays an annual dividend of CHF 0.80 per share and has a dividend yield of 3.20%, as of October 22. The company is one of the best dividend stocks on our list because of its strong cash flow and 3-year consecutive dividend growth.
In October, Barclays maintained an Equal Weight rating on ABB Ltd (NYSE:ABB) with a 26 CHF price target. The firm mentioned the company’s energy and manufacturing transition and its stable policy of share buybacks.
As of the end of Q2 2022, 17 hedge funds tracked by Insider Monkey had investments in ABB Ltd (NYSE:ABB), the same as in the previous quarter. These investments are collectively worth over $683 million.
Artisan Partners mentioned ABB Ltd (NYSE:ABB) in its Q2 2022 investor letter. Here is what the firm has to say:
“ABB Ltd (NYSE:ABB) is a Swiss-based industrial conglomerate that manufactures electronic products and equipment. There is no new significant fundamental news on the company. We believe the share price decline relates to negative sentiment associated with industrial companies.”
6. Shell plc (NYSE:SHEL)
Dividend Yield as of October 22: 3.70%
Shell plc (NYSE:SHEL) is a British multinational oil and gas company that has expertise in the exploration and production of oil and natural gas. The company raised its dividends four times after the pandemic of 2020, which makes it one of the best dividend stocks on our list. Moreover, it targets the distribution of 20% to 30% of its cash flow from operations to shareholders in dividends and buybacks. The company pays a quarterly dividend of $0.50 per share for a dividend yield of 3.70%, as of October 22.
In the second quarter of 2022, Shell plc (NYSE:SHEL) reported a free cash flow of $12.4 billion, up from $9.7 billion during the same period last year. The company’s revenue for the quarter came in at $100 billion, up 65.3% from the prior-year period. It also announced $6 billion in shares buyback which is expected to be completed by the third quarter.
In September, Piper Sandler raised its price target on Shell plc (NYSE:SHEL) to $80 with an Overweight rating on the shares. The firm remained positive on integrated oils and appreciated the company’s strategic properties.
Shell plc (NYSE:SHEL) was a popular buy among elite funds as some of the major names like Ken Fisher and Israel Englander owned stakes in the company in Q2. Overall, 39 hedge funds in Insider Monkey’s database owned positions in the energy company, with stakes valued at over $3.46 billion.
In addition to some of the best dividend stocks like Colgate-Palmolive Company (NYSE:CL), PepsiCo, Inc. (NASDAQ:PEP), and Merck & Co., Inc. (NYSE:MRK), investors are also paying attention to Shell plc (NYSE:SHEL) due to growing energy demand.
Harding Loevner mentioned Shell plc (NYSE:SHEL) in its Q1 2022 investor letter. Here is what the firm has to say:
“While risks of unforeseen consequences arising from the Ukraine conflict are high, on this front we are cautiously optimistic that China will work hard to maintain its neutrality in a credible way, as it is a huge beneficiary of trade with the rest of the world, especially the rich developed nations. We think it likely that China, along with India, will continue to buy oil and gas from Russia (just as Europe, at least for now, plans to keep its gas pipelines open), and do not expect that fact to alter China’s trade relations with the West much. Nevertheless, we must contemplate that our optimism is misplaced on the importance of membership in the global network of exchange. If our central and optimistic case—admittedly an educated guess—is wrong, then we’d need to greatly modify our views of which companies in our opportunity set will face new barriers to profitable growth, and which might stand to benefit, relatively, from a further receding of globalization. (Global trade, after all, has never matched the peak share of GDP it reached in 2008, before the Global Financial Crisis.) We’d expect such a world to be less efficient, as the cold logic of comparative advantage is demoted as a determinant of which goods or services are produced and where. That would lead to a less prosperous world, since exploiting comparative advantage is a cornerstone of wealth creation. If regional blocs began to raise limits on the movement of capital as well as goods, we’d need to parse which of our multi-national companies were at risk of declining sales from increasingly hostile, siloed countries. Royal Dutch Shell (NYSE:SHEL) has found its Siberian oil and gas joint venture assets stranded by the combination of sanctions and the public opprobrium of Russia’s actions.”
5. TotalEnergies SE (NYSE:TTE)
Dividend Yield as of October 22: 3.81%
TotalEnergies SE (NYSE:TTE) is a French multinational energy and petroleum company and is one of the major oil companies in the country. In September, the company announced the adoption of its cash flow allocation strategy for the coming years. The strategy states that 35% to 40% of the company’s cash flow will be distributed among shareholders while maintaining its transformation plans with annual net investments amounting to $14 billion to $18 billion between 2022 to 2025.
TotalEnergies SE (NYSE:TTE) currently pays an interim dividend of €0.69 per share with a dividend yield of 3.81%, as of October 22. On September 28, the company also announced a special interim dividend of €1.00 per share, which makes the company one of the best dividend stocks on our list. In Q2 2022, it generated over $13.2 billion in cash flow and $4.5 billion in free cash flow, which shows that the company has sufficient cash to support its dividends.
In October, JPMorgan raised its price target on TotalEnergies SE (NYSE:TTE) to €66 with an Overweight rating on the shares, appreciating the company’s free cash flow outlook.
Of the 895 elite funds tracked by Insider Monkey, 20 hedge funds reported a bullish stance on TotalEnergies SE (NYSE:TTE) in Q2 2022, the same as in the previous quarter. The stakes owned by these hedge funds have a total value of over $1.88 billion. Arrowstreet Capital is one of the company’s main stakeholders in Q2.
Artisan Partners mentioned TotalEnergies SE (NYSE:TTE) in its Q2 2022 investor letter. Here is what the firm has to say:
“We added one new position this quarter, TotalEnergies SE (NYSE:TTE). TTE is one of the world’s largest energy companies. It develops and produces oil and gas, produces and sells refined products, is one of the largest producers and traders of LNG, and owns a large portfolio of renewable power generating assets. TTE has one of the lowest cost portfolios of oil and gas assets and therefore one of the lowest breakeven points in the industry. It also has one of the best balance sheets in the industry. We estimate it will reach a net cash position sometime in 2023. (Click here to view the full text).
4. Novartis AG (NYSE:NVS)
Dividend Yield as of October 22: 4.31%
Novartis AG (NYSE:NVS) is a multinational pharmaceutical corporation with headquarters in Switzerland. It is one of the largest pharmaceutical companies in the world. The company is one of the best dividend stocks on our list as it has been raising its payouts consistently for the past 25 years. It currently pays an annual dividend of CHF 3.10 per share and has a dividend yield of 4.31%, as of October 22.
In the second quarter of 2022, Novartis AG (NYSE:NVS) reported a free cash flow of $3.3 billion and its net income came in at $1.7 billion. The company’s Q2 sales grew by 5% and generated $12.7 billion in total revenues. In 2021, it paid nearly $7.5 billion in annual dividends to shareholders, reflecting its shareholder obligation.
In September, Kepler Cheuvreux upgraded Novartis AG (NYSE:NVS) to Buy with a CHF 90 price target. The firm mentioned the company’s growing sales but also expressed concerns regarding its research and development abilities.
As of the close of Q2 2022, 22 hedge funds tracked by Insider Monkey owned stakes in Novartis AG (NYSE:NVS), up from 21 in the previous quarter. These stakes have a total value of over $1.76 billion. Fisher Asset Management is the company’s largest stakeholder in Q2, owning stakes worth over $950.6 million.
3. Sanofi (NASDAQ:SNY)
Dividend Yield as of October 22: 4.32%
Sanofi (NASDAQ:SNY) is a French multinational pharmaceutical and healthcare company that provides life-changing treatments to its consumers. In October, Barclays maintained an Equal Weight rating on the stock with an €85 price target, highlighting the company’s balance sheet and earnings growth.
In Q2 2022, Sanofi (NASDAQ:SNY) reported a free cash flow of over €1.5 billion, up 7.5% from the same period last year. The company’s revenue for the quarter came in at €10.1 billion, versus a consensus of €9.8 billion. Its vaccines were also up by 8.7% due to a strong rebound in travel and booster shots.
Sanofi (NASDAQ:SNY) has been raising its dividends consistently for the past 28 years, coming through as one of the best dividend stocks on our list. The company currently pays €0.83 per share in quarterly dividends and has a yield of 4.32%, as of October 22.
The number of hedge funds tracked by Insider Monkey owning stakes in Sanofi (NASDAQ:SNY) grew to 28 in Q2 2022, from 19 in the previous quarter. These stakes have a consolidated value of over $1.68 billion. With 4 million shares, Camber Capital Management was one of the company’s leading stakeholders in Q2.
2. Fresenius Medical Care AG & Co. KGaA (NYSE:FMS)
Dividend Yield as of October 22: 5.19%
Fresenius Medical Care AG & Co. KGaA (NYSE:FMS) is a Germany-based healthcare company that mainly provides kidney dialysis services to its patients and has over 4,000 outpatient dialysis centers. In 2022, the company announced a 0.7% hike in its annual dividend to €1.35 per share. This was the company’s 25th consecutive year of dividend growth, which makes it one of the best dividend stocks on our list. As of October 22, the stock has a dividend yield of 5.19%.
In October, Morgan Stanley initiated its coverage of Fresenius Medical Care AG & Co. KGaA (NYSE:FMS) with an Equal Weight rating and a €34 price target, presenting a positive stance on the Medtech group. The firm also mentioned that these stocks are among the defensive industry groups.
As of the close of Q2 2022, 8 hedge funds tracked by Insider Monkey owned stakes in Fresenius Medical Care AG & Co. KGaA (NYSE:FMS), down from 10 a quarter earlier. The consolidated value of these stakes is over $361 million. Pzena Investment Management owned over 13 million shares in the healthcare company in Q2, becoming the company’s major stakeholder.
1. British American Tobacco p.l.c. (NYSE:BTI)
Dividend Yield as of October 22: 7.51%
British American Tobacco p.l.c. (NYSE:BTI) is a manufacturer of tobacco and related products with headquarters in London. On September 28, the company announced a quarterly dividend of $0.7404 per share, in line with its previous dividend. It maintains a 23-year streak of consistent dividend growth, which qualifies it as one of the best dividend stocks on our list. As of October 22, the stock’s dividend yield came in at 7.51%.
In August, Barclays lifted its price target on the stock to 4,500 GBP and maintained an Overweight rating on the shares.
In the first six months of 2022, British American Tobacco p.l.c. (NYSE:BTI) reported an operating cash flow of £3.2 billion, up 42.9% from the same period last year. Its free cash flow for the first six months grew to £2.3 billion, from £1.2 billion in the prior-year period. Year-to-date, the company returned £3.8 billion to shareholders, £2.5 billion of which accounted for dividend payments.
According to Insider Monkey’s data, 17 hedge funds owned investments in British American Tobacco p.l.c. (NYSE:BTI) in Q2 2022, down from 19 in the previous quarter. These investments are worth over $2.3 billion.
Distillate Capital Partners LLC mentioned British American Tobacco p.l.c. (NYSE:BTI) in its Q1 2022 investor letter. Here is what the firm has to say:
“Distillate Capital’s International FSV Strategy is less expensive, more fundamentally stable, and less levered than the benchmark All Country World Ex U.S. (ACWI-EX US) Index.The largest new position is British American Tobacco (NYSE:BTI), which was not owned previously due to leverage, but now passes that threshold and offers an 11% free cash flow to market cap yield.”
You can also take a look at 11 Best Income Stocks to Buy Right Now and 13 Best Long-Term Dividend Stocks to Buy Now
Follow Insider Monkey on Twitter
Suggested articles:
- 10 Best Video Conferencing Stocks To Invest In
- 10 Cheap Value Stocks To Buy
- 12 Small Cap Ecommerce Stocks To Invest In
Disclosure. None. 10 Best European Dividend Stocks to Buy Now is originally published on Insider Monkey.
