In this article, we will discuss the 5 best European dividend stocks to buy now. If you want to see more stocks, you can also take a look at the 10 Best European Dividend Stocks to Buy Now.
5. Koninklijke Philips N.V. (NYSE:PHG)
Forward Dividend Yield: 5.93%
Number of Hedge Fund Holders: 8
Koninklijke Philips N.V. (NYSE:PHG) is an Amsterdam, Netherlands-based diversified medical technology and homecare company.
In a research note issued on September 12, Delphine Le at Societe Generale upgraded Koninklijke Philips N.V. (NYSE:PHG) stock from a Hold to a Buy rating and gave the stock listed on the Amsterdam Stock Exchange (AMS) a target price of EUR 21. This translates into a target price of $20.62 for the shares listed on the NYSE. The analyst believes that the current stock price has factored in all the negative developments, and Koninklijke Philips N.V. (NYSE:PHG) stock is currently significantly undervalued. Le anticipates the challenges related to recall in the company’s Connected Care segment to ease in Q3 2022, allowing Koninklijke Philips N.V. (NYSE:PHG) to regain its strong position in the industry.
Koninklijke Philips N.V. (NYSE:PHG) has a forward EV to EBITDA multiple of 9.3x as of September 30. This is substantially lower than the industry average of 14.3x and the company’s five-year average of 11.5x.
Here’s what Fiduciary Management said about Koninklijke Philips N.V. (NYSE:PHG) in its Q4 2021 investor letter:
“Koninklijke Philips N.V. (PHIA NA) is a top-10 global MedTech company with a strong position in diagnostic imaging, patient monitoring, respiratory care, and personal health. In normal times, the business should be able to grow the top line in the mid-single-digits, with potential to drive several hundred basis points of margin improvement. However, a €500 million sleep device product recall (to be completed by Fall 2022) has weighed heavily on the stock. In limited circumstances, including when unapproved ozone cleaning is used, a sound abatement foam component may degrade. This foam is being extensively tested for potential harmful effects (including carcinogens). Relatedly, Philips Respironics’ facility in Pennsylvania has received a Form 483 letter from the FDA with several “observations” that need to be addressed. We believe the €13 billion hit (-30%+) to the market cap far exceeds virtually all worst-case fundamental scenarios. Sleep system hardware accounts for only ~7% of the company’s sales. Prior to the recall, the stock had been trading at a sizeable discount to MedTech peers, despite having a good chance of growing earnings faster than the sector. The gap has widened dramatically, creating an attractive setup for those who are willing to see through this bump in the road.”
