3 Top Swedish Dividend Stocks

I continue to research dividend stocks from all different countries to help you out as an individual investor. This costs me a lot of time, because I need to analyse many local indexes and verify lots of annual reports.

On top of that it’s unfortunately really hard to trust automated data providers like Bloomberg, because they often lack nuances when presenting the dividend histories. A good example of that is the typical data mistake from Ahold Delhaize as a result of their interim and final dividend policy.

But luckily there’s also a great European Dividend Growth investment community! As an example, several of you have reached out to me over the last 2 years with unique stock data so that we get the facts right and uncover some hidden gems.

One example of that is my buddy Dividend.exe. I didn’t got to research the Swedish stock exchange yet, but I could tell that he’s very chauvenistic in a positive way.

Hence, I was very delighted when he offered to share with us his top 3 Swedish Dividend Stocks.

So without further ado, let’s give him a big round of applause 👏. This is his first blog post ever!

Note: Dividend Stocks from Sweden are subject to a 30% dividend withholding tax.


Hello, I’m “Dividend.exe”! I’m very happy that eDGI gives me the opportunity to share with you my top 3 dividend stocks from Sweden.

But first, let me introduce myself a bit.

I’m a 33-year-old “normal” working family dad living in Sweden and I’m living together with my fiancee and our 3-year-old son. Besides that, my passion has always been soccer and I have played A LOT of soccer in my “younger” days. But that was then and nowadays I work a normal 9 to 5 job.

From an investing point of view, it should come as no surprise that my investment strategy is in line with my friend EDGI.

Surprise, surprise, it’s of course dividend growth investing.

I must confess that I’m really in love with the passive income I receive via dividends. I truly believe that it’s one of the easiest and most effective ways for small retail investors to build wealth over time.

Dividends help you fight inflation too.

As an example, if inflation continues to average 2,5-4% throughout your financial life, and your dividend payouts increase by an annual average of 3-4% or more, you should be able to beat inflation. The good news is that many dividend aristocrats increase their dividends annually by at least 5% or more.

That’s amazing, isn’t it?!

But hey, enough about my thoughts, let’s get started!

Here are my top 3 dividend stocks from Sweden!

3. JM AB

The first stock I would like to discuss is JM. This company is one of the leading developers of housing and residential areas in the Nordic region. It was founded in 1945 and it’s currently headquartered in Stockholm. JM  is a public limited company listed on NASDAQ Stockholm, Large Cap segment.

JM in brief

JM’s (STO:JM | ISIN:SE0000806994 ) operations focus on the new production of homes in attractive locations. Actually, their main focus is on expanding metropolitan areas and university towns in Sweden, Norway, and Finland. 

They are also involved in project development of commercial premises and contract work, primarily in the Stockholm area. 

The Dividend

This construction company might be little known outside of Sweden. However, it is very nice to see that it increased the dividend every year since the financial crisis in 2008. This includes the start of the pandemic in 2020 which saw many companies freezing or cutting their dividends.

JM AB dividend history
JM AB 10-year Dividend History

The actual dividend growth is very solid with a 10-year compounded annual growth rate (CAGR) of 7,6%. This easily beats the average rate of inflation from the last 10 years.

It becomes even more interesting when we combine this with an average current dividend yield of 6.2%. This gives the company a Chowder score of 13.8 which beats the general threshold of 12.

But it doesn’t stop there. They have also been buying back its shares over time because in the last 10 years it was able to reduce its share count from 77,8 million to 69,8 million.

Last but not least, it’s very common in Sweden for a company to pay a dividend annually or bi-annually. In this case, JM AB is paying a dividend once a year in April.

My thoughts on valuation

I’m quite bullish on this company and how they are positioned for the future. At the time of writing the stock is trading at 208 kr. I believe that a company like JM AB deserves a P/E multiple of 10. At such a multiple, the company would trade around 269 Kr.

That’s why I believe that the stock is currently undervalued.

Q1 2022 Statistics

Revenue Growth2.2%Payout Ratio50%
Profit Growth19%Return On Invested Capital21.9%
Free Cash Flow Margin16.2%EBITDA margin15.1%
Profit Margin12%Dividend Yield6.2%

Full disclosure: I (don’t) own JM yet.


2. Axfood AB

The second Swedish dividend growth stock I’m excited about is Axfood AB (STO:AXFO | SE0006993770). This is a Sweden-based company engaged in the food retail and wholesale trade in Sweden.

The company was founded in 2000 after a merger between the Swedish grocery store chains Hemköp, D&D Dagligvaror, Spar Sverige, and Spar Inn Snabbgross.

Axfood in brief

The Company owns and operates over 200 retail stores and they are spread all over the country. If you will ever visit Sweden, then I’m sure you’ll quickly recognize them.

As an example, I think it’s fair to say that Axfood AB can be considered as a mix between Procter & Gamble and Kroger. They have their own brands like PG and their own stores like Kroger.

Having said that, Axfood’s retail business is conducted through four wholly-owned chains:

  • Willys, specializing in discount food retail
  • Hemkop, which is engaged in the sales of food retail products,
  • Dagab. Dagab is a purchasing and logistics company for warehousing and deliveries of groceries to retail and e-commerce consumers.
  • Snabbgross

Together they earned the following total group net sales in Q1 2022:

This might sound cruel and sad, but the Russian invasion of Ukraine gave the stock quite a large boost. 

At the time it was considered a “safe” investment in the midst of stress, probably due to its secure cash flows that everyone feels they can count on.

The Dividend

Axfood pays its dividends bi-annually (March and Sep) and it currently yields 2.7%. Their EPS payout ratio is 68% and I realize this sounds high. 

However, Axfoods is an example of a slow compounder with very stable and predictable earnings. That’s why I consider their dividend safe, even though the dividend payout could be considered on the high end.

Having said that, like JM AB, they have an uninterrupted dividend growth track record of 13 years. The company has a 10-year compounded annual growth rate (CAGR) of 10%.

axfood dividend history swedish dividend stocks
Axfood AB – 10-year dividend history

My thoughts on Valuation

I think that this is a fantastic company. It is a slow-growing beast that you can dollar cost average your whole life. 

Though, Axfood stock seems always super expensive, nowadays even more. The stock is currently trading at 293 kr and a P/E of 25,8 and it would need to drop to a P/E multiple of 20 (227 kr) to get into my buying zone.

Hence, I currently consider the stock overvalued.

Q1 2022 statistics

Revenue Growth13.8%Payout Ratio68%
Profit Growth20%Return On Invested Capital22.8%
Free Cash Flow Margin1.3%Return on Equity56.5%
Profit Margin7.2%Dividend Yield2.7%

Full disclosure: I (don’t) own Axfood yet because of the valuation.


1. Castellum AB

Finally my absolute favorite dividend stock in Sweden is of course European Dividend Artistocrat Castellum AB (STO:CAST | SE0000379190)!

Castellum is one of the largest REITs (not technically) in Sweden with presence in office space, public sector properties, warehouses & logistics.

The Company is engaged in the acquisition, ownership, management and development of property on a long-term basis and they increase their Net Asset Value via targeted investments.

The company covers approximately 4.3 million square meters of total leasable area. Castellum AB operates in approximately 20 cities across Sweden, as well as in Copenhagen, Denmark and Helsinki, Finland.

Having said that, most recently they changed their CEO and I have quite some faith in Rutger Arnhult as well.

The Dividend

Castellum has increased its dividend for 24 consecutive years and this is really unique in Europe. On top of that the company has been growing their dividend with a 9% 10 year compounded annual growth rate.

swedish dividend stocks castellum ab dividend history
Castellum 10-year dividend history

More recently, they also announced a new payment schedule from semi-annual to quarterly. This is awesome, because there are not so many Swedish (or even European!) dividend stocks that pay a dividend on a quarterly basis.

Last but not least, the dividend currently yields 4.2% with a payout ratio of 64% which gives the company enough room to continue growing the dividend in the upcoming years.

My Thoughts on Valuation

In my humble opinion, Castellum is a MUST in a Swedish/Euro dividend growth portfolio. It ticks all the boxes for dividend growth investors and it continues to be able to grow both its revenues and bottomline numbers.

Having said that, I agree with European DGI on Castellum from a valuation point of view. He has an approximate fair value from 190 Kr which means that Castellum is really trading in its value zone right now.

Q1 2022 statistics

Revenue Growth16.8%Payout Ratio68%
Return on Equity14.2%Return On Invested Capital6.8%
Debt / Equity92%Return on Assets6.4%
Dividend Yield4.2%

Full disclosure: I own stocks in Castellum AB


That was all for me regarding the top Swedish dividend stocks!

Thank you so much European Dividend Growth Investor for the opportunity to spread the love from Sweden. Stay safe and be kind to one another! Thanks for reading.

Follow Dividend.exe on Twitter

Disclaimer: I am not a financial advisor. Do not take anything on my text as financial advice. Do your own research.


Disclaimer

I’m not a certified financial planner/advisor nor a certified financial analyst nor an economist nor a CPA nor an accountant nor a lawyer. I’m not a finance professional through formal education. I’m a person who believes and takes pride in a sense of freedom, satisfaction, fulfillment and empowerment that I get from being financially competent and being conscious managing my personal money. The contents on this blog are for informational and entertainment purposes only and does not constitute financial, accounting, or legal advice. I can’t promise that the information shared on my blog is appropriate for you or anyone else. By reading this blog, you agree to hold me harmless from any ramifications, financial or otherwise, that occur to you as a result of acting on information provided on this blog.

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European DGI

It's my desire to retire early via Dividend Growth Investing as a passive income stream. This is not easy and especially when living in Europe. That's why I started this blog and share my journey: to give you a European perspective.
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