Are you looking for some more yield in this low interest environment? Check out these 15 High Yield European Stocks which have continued to reward their shareholders with juicy dividend income.
As you might know, Europe is a continent which is infamous by international investors for its dividend growth track record. The main reason for this is the culturally difference in approach to dividend payments.
In Europe companies mostly focus on paying out a certain percentage of their profits to reward their shareholders. Whereas in the US companies mostly have a dividend policy which focuses on ever increasing dividends.
On average this means that you will find higher dividend yields among European stocks versus US stocks. The down side is that you will have more volatility in your dividend income during stock market crashes and you could easily lose 20% of dividend income compared to the more stable income from US stocks.
This is not necessarily a bad thing though! It actually means that you would need to invest less capital in European dividend stocks right now if you would like to start living of dividends already.
I guess that every bad thing also has its good thing (ref: Johan Cruyff).
Just imagine the following example:
You will need 30.000 Euro (pre-tax) to cover your yearly expenses. In your case, this would mean financial independence to you. So how much Capital would you need to have invested in dividend paying companies depending on the different categories of dividend yields?
|Dividend Yield||Capital Required for 30.000 Euro of Dividend Income|
As you can see, the amount of capital is significantly different when you compare a portfolio with an average dividend yield of 5% versus an average of 3%.
Although, I am not suggesting that you should prioritize dividend yield over long-term earnings power. This is what we call the typical yield-trap which seasoned dividend investors often warn about to the more newer investors.
However, I would also like to share with you the perspective that it’s sometimes good to just mix-up your dividend portfolio with some high-yielders for current dividend income. You can then use that dividend income to fuel up the dividend snowball so that you benefit early on from a dividend reinvestment approach.
You Just need to accept that some of those companies might cut their dividends by up to 50% if their company gets under severe stress in an economic down turn. My experience though is that most of those companies are able to retain their dividends, so owning just a few high-yielders should limit the percentage of total loss of income.
Actually, this is also what diversification is for 👌
Are you rather interested in European companies which have paid a growing dividend for at least 20 years? Have a look at a selection of 30 European Dividend Aristocrats available via the Noble 30 index.
So, let’s therefore focus today on some of those high yield European stocks.
Which companies are we really talking about? In what line of business are they and how do their dividend growth track records look like?
I have selected 15 high yield European stocks for you with a dividend yield of more than 4% and at least no dividend cut in the last 5 years.
This should be a good list for you to get started. All what’s left is to do some analysis by yourself, but once you initiate a position: just let the dividends make you rich and reinvest them if you want to become truly wealthy.
Enjoy the read.
Disclaimer: These are not buy Recommendations. Always do your own homework. This list solely serves as an inspiration, because this information isn’t easily available on the internet. Also, sometimes good companies will go bad. Hence, invest with caution!
High Yield European Stocks
Hereby my selection of 15 high yield European Stocks that are in my opinion worth to consider in a dividend income portfolio:
|1||Sanofi SA||France||Health Care|
|2||Bayer AG||Germany||Health Care|
|6||National Grid Plc||United Kingdom||Utilities|
|7||Red Electrica Corporacion||Spain||Utilities|
|8||Rio Tinto Plc||United Kingdom||Materials|
|11||Zurich Insurance Group AG||Switzerland||Financials|
|12||NN Group NV||the Netherlands||Financials|
|14||Danone SA||France||Consumer Staples|
|15||British American Tobacco Plc||United Kingdom||Consumer Staples|
These European dividend paying companies are not well diversified across all different sectors, just be aware of that. However, they do have good credit ratings and most of them have decent dividend growth histories.
1. Sanofi SA
|Dividend Yield||4.08%||Sector||Health Care|
|Years Dividend Growth / Remain||21||Free Cash Flow Payout Ratio||79.55%|
|5 Yr Avg Dividend Growth||2.02%||Credit Rating||A1 (Moody’s)|
|Google Ticker Symbol||EPA:SAN||ISIN||FR0000120578|
Sanofi SA was officially founded in 1973 as a subsidiary of Elf (yes, the oil company). However, Sanofi as we know it today has really been created in 1994 when it was listed as an independent company on the stock exchange in Paris.
Fast forward to today and you will notice that Sanofi is the 7th largest Pharmaceutical company in the world by revenue (40.46 Bln). It is able to generate so much sales due a strong product portfolio in Specialty Care (immunology, rare diseases, rare blood disorders, neurology and oncology), Vaccines, and General Medicines (diabetes, cardiovascular, and established products).
It’s also a big R&D spender, because is has spent about 6 Billion in R&D in 2019. That’s a lot of money and equates to approximately 15% from their annual revenues. Their product pipeline looks strong from what I’ve seen.
I find Sanofi SA an interesting dividend paying company. The yield is juicy, because the growth has been lagging over the last few years. The good thing is that their balance sheet is strong and management is optimistic about their own growth forecasts of about 7% in EPS.
Let’s see what the future brings, but enjoy the dividend of this high yield European stocks while waiting.
2. Bayer AG
|Dividend Yield||5.81%||Sector||Health Care|
|Years Dividend Growth / Remain||16||Free Cash Flow Payout Ratio||57.62% (TTM)|
|5 Yr Avg Dividend Growth||4.47%||Credit Rating||Baa1 (Moody’s)|
|Google Ticker Symbol||ETR:BAYN||ISIN||DE000BAY0017|
Bayer AG is a German multinational pharmaceutical and life sciences company. It was founded by Friedrih Bayer in 1863 and it’s based in Leverkusen. Until today, Bayer is still best known for its Aspirin product and for trademarking the name Heroin in the beginning of the 20th century.
Nowadays Bayer is not only one of the largest pharmaceuticals, but also the largest agricultural seed company in the world after the acquisition of Monsanto. In my opinion this acquisition will go into the history books as one of the worst acquisitions ever by a European company.
It literally went straight into a very lengthy litigation process regarding one of the core-products called RoundUp. It will cost the company more than 10 Billion in settlement costs while it’s still not fully settled. This is on top of the 66 Billion acquisition price of Monsanto itself.
This has also led to a ballooning debt on the balance sheet and it is one of the reasons why I consider their dividend at risk. This is a pity, because the fundamentals of this company are very strong. Their Free Cash Flow can easily cover their dividends, but the company will likely have to focus first on paying the settlements and the related debt.
At the same time, this might also be one of the most undervalued companies in this list, because the sentiment couldn’t be worst against Bayer. Do you have the courage to invest in it?
Anyway, for this reason I’m very much looking forward for their 2020 Annual Report.
3. Total SE
|Years Dividend Growth / Remain||38||Free Cash Flow Payout Ratio||48.20% (2019)|
|5 Yr Avg Dividend Growth||1.89%||Credit Rating||Aa3 (Moody’s)|
|Google Ticker Symbol||EPA:FP||ISIN||FR0000120271|
Total SA was founded in 1924 by the government and about ninety banks so that France would have its own national Oil company. The company is nowadays one of the 7 big oil & gas majors in the world with a trailing-twelve-months (TTM) revenue of 130 bln. This is much less than the 176 Bln in 2019 and I am worried that the company might need to cut its dividend if the oil price stays this low.
Having said that, Total is really focused on becoming an low-cost oil producer with a breakeven price of 25 USD per barrel. If they manage to pull this off, then they should be in a position to keep paying this juicy dividend.
There is also a bright side by investing in Total SA, because its one of the industry frontrunners in the energy transition. You can clearly see that it’s trying to pivot more and more into business models focused on clean and renewable energy.
I think that we would all agree that investing in Oil & Gas companies right now requires quite some nerves. But if the oil price recovers in the upcoming year, then you won’t only enjoy a juicy dividend. In such case you can also expect quite some capital appreciation.
4. Enagas SA
|Years Dividend Growth / Remain||19||Free Cash Flow Payout Ratio||51.97% (2019)|
|5 Yr Avg Dividend Growth||4.24%||Credit Rating||Aa3 (Moody’s)|
|Google Ticker Symbol||BME:ENG||ISIN||ES0130960018|
Enagas SA was founded in 1972 by the Spanish government to create a nationwide gas-network and it got privatized in 1994. The interesting thing about this company is that it’s protected against take-overs, because the Spanish government doesn’t allow any shareholder to own more than 5% of the company. Enagas is currently present in eight countries, but most often as part of a joint venture (i.e. United States, Mexico, Chile, Peru and Italy).
Like many European companies, Enagas is also priced for it’s focus on sustainability. It prides itself to be part of the Dow Jones sustainability index and for being on the A List of CDP Climate Change. I think that this is a good thing. I’m a strong believer that Capitalism and Sustainability actually create a win-win situation.
Having said that, when you invest in Enagas then you are mainly in it for the dividend income, not so much from a share price and capital appreciation point of view. But hey, never watch a given horse in the mouth, because Enagas is spotting the highest dividend yield in this list with 8.93%
It is feeling some impact of Covid-19, because less gas is currently being consumed, so it will be interesting to observe if this will impact the upcoming strategy. Let’s see.
5. Enel S.p.A.
|Years Dividend Growth / Remain||6||Funds from Operations Payout Ratio||32.67% (TTM)|
|5 Yr Avg Dividend Growth||16.59%||Credit Rating||BBB+ (Moody’s)|
|Google Ticker Symbol||BIT:ENEL||ISIN||IT0003128367|
Enel S.p.A. is an Italian manufacturer and distributor of electricity and gas. The company was founded in 1962 by the government of Italy and privatized in 1999. Though, it’s important to know that the Ministry of Economy and Finance still owns a 23.59% stake in the company. This means that it effectively controls the company as it is today.
Like other European utilities, the company is strongly focused on the energy transition via decarbonization and electrification of the energy consumption. This is one of their main pillars in how they want to support the Paris Agreement.
Enel is neither an Italian pure-play company, because it also operates in several other countries in Latin America and Southern Europe (i.e. Spain, Russia, United States and Mexico).
From a dividend point of view it’s worth mentioning that their dividend history hasn’t been a straight line up. Actually, it has been really choppy until 2014. After that it stabilized and it grew its dividends in the last few years with a CAGR of 16%. It is also clear in its intention, because the company committed to grow the dividend to a new minimum guaranteed 0,40 Euro cents per share in 2022. Those are not my words, because those are directly taken from page 54 in the 2019 annual report.
I think that it is an interesting company to consider although I personally think that there are more interesting companies in this list to invest in.
6. National Grid Plc
|Years Dividend Growth / Remain||8||Funds from Operations Payout Ratio||47.62% (2020)|
|5 Yr Avg Dividend Growth||2.46%||Credit Rating||Baa1 (Moody’s)|
|Google Ticker Symbol||LON:NG||ISIN||GB00BDR05C01|
National Grid plc is a electricity and gas utility company in England. It was founded in 1990 as part of a privatization from the British government. From day 1 it has been focused on the downstream activities of electricity and gas and it got listed on the London stock exchange in 1995.
This is actually quite an interesting Utility, because it’s one of the largest owned private utilities in the world with limited government regulation. This is really different compared to for instance ENEL and Enagas SA. Another interesting fact is that it also owns a large part of the grid in the east of the United States.
Having said that, the company is a decent dividend payer with a current yield of 5.67%. I expect their dividend growth limited in the upcoming years, so this would rather be an investment for current dividend income.
7. Red Electrica Corporacion SA
|Years Dividend Growth / Remain||22||EPS Payout Ratio||81.54% (TTM)|
|5 Yr Avg Dividend Growth||7%||Credit Rating||BBB (Fitch)|
|Google Ticker Symbol||BME:REE||ISIN||ES0173093024|
Red Electrica ($BME:REE) is a Spanish utility company which is mainly known for operating the Spanish electrical grid. It was created in 1985 and publicly listed in 1999 by the Spanish government which still holds 20% of the shares. The rest of the shares are publicly available on the stock market.
What is interesting is that this is the third utility on this high dividend yield list which earns a large portion of their revenue in Spain (Enel and Enagas). At the same time the company is number 22 in the Noble 30 Index when measured by their dividend growth track record.
Their dividend growth track record looks very good, but the question is whether they can sustain this going forward. At the moment I’m waiting to get some more understanding about their vision for the upcoming 6 years, because their revenue seems at risk from 2024 onwards.
I’m not saying that this puts the dividend at risk at this moment in time, but it is some of the uncertainty that currently is associated with Red Electrica.
8. Rio Tinto Plc
|Years Dividend Growth / Remain||4||Free Cash Flow Payout Ratio||86.9% (2019)|
|5 Yr Avg Dividend Growth||17.4%||Credit Rating||A2 (Moddy’s)|
|Google Ticker Symbol||LON:RIO||ISIN||GB0007188757|
Rio Tinto Group is a British-Australian company and the world’s second largest metals and mining corporation. The company produces all around the world iron ore, copper, diamonds, gold and uranium. It’s biggest competitor is BHP Billiton.
Their history from the early beginnings is very interesting, because it was founded in 1873 and named after the Rio Tinto in Huelva, Spain. This is how a group of investors started the company with their first acquisition of a mine. Since then it has heavily expanded into the multi-billion dollar company it is today.
From a dividend point of view the company has always been a fat dividend payer. However, it needs to be noted that their dividend history from that perspective has also been very choppy. I would even say that the company doesn’t really belong in this list if I would have been really strict on the “5 year no dividend cut” rule, because it cut their dividend slightly in 2014.
So why did I include this company in this list? Well, simply said they have been paying very fat special dividends to make it up, so that’s why I’m seeing this one through the eyes.
9. BASF SE
|Years Dividend Growth / Remain||10||EPS Payout Ratio||#N/A|
|5 Yr Avg Dividend Growth||3.34%||Credit Rating||A3 (Moddy’s)|
|Google Ticker Symbol||ETR:BAS||ISIN||DE000BASF111|
BASF SE is a German company and the largest chemical producer in the world. The company was founded in 1865 in Mannheim, Baden. Like Bayer AG, the company went through many transformations to become the company that it is today, but we can say that it always stayed pretty much in the chemical industry. This is still how it earns the majority of it’s money today and I don’t expect that to change anytime soon.
Having said that, their payout ratio looks bad, but this is mainly due to a loss incurred related to certain cash impairment items related to the impact of the corona virus. Without those impairments the dividend payout ratio will probably be 110%.
The question then remains: will the dividend be cut in 2021? Well, there is a likelihood although I’m not too concerned with it. If it happens, it will probably be a small cut, because the board of directors is very committed to paying out a growing dividend. This is quite unique for a European company to be so explicit in their dividend policy. Their balance sheet looks also strong, so I wouldn’t be surprised if they just retain the dividend and sit it out.
10. Allianz SE
|Years Dividend Growth / Remain||10||EPS Payout Ratio||59.93%|
|5 Yr Avg Dividend Growth||6.98%||Credit Rating||AA (S&P)|
|Google Ticker Symbol||ETR:ALV||ISIN||DE0008404005|
Allianz SE is a financial services company mostly known for its insurance business. The company was founded in Berlin in 1890 by Carl von Thieme. The company went also international by opening an office already in London in 1893. This was not so common at the time for a newly founded company.
If I’m not correct, then Allianz is currently the largest insurance and asset management company in the world with branches almost all over the world. I would say that this is quite unique for a European company.
The company has also recovered very well from the recession in 2009 when it also had to cut its dividend by 40%. The financial recession was just too much impacting their bottom-lines back then.
It currently pays a dividend of more than 4.5% yield which I find a very attractive. Especially when looking at their performance in the the last 5 years. I wouldn’t be surprised if it keeps on growing their dividend with a similar 7% growth rate in the next 5 years. Their balance sheet can also easily facilitate this.
11. Zurich Insurance Group AG
|Years Dividend Growth / Remain||10||EPS Payout Ratio||91.24%|
|5 Yr Avg Dividend Growth||3.3%||Credit Rating||AA- (S&P)|
|Google Ticker Symbol||SWX:ZURN||ISIN||CH0011075394|
Zurich Insurance Group AG is a Swiss insurance company founded in 1872 at the request of the Swiss transport insurance company. It has a long history and it expanded its operations into many countries in the world.
Nowadays the company earns it money via general insurance, global life insurance and farmers insurance. Actually, it just got expanded few days ago with its recent Metlife’s property and casuality acquisition in the US.
I personally find the company not such a strong performer like Allianz SE from a financial point of view. Their dividends were flat for most of the decade and only recently it got back to modestly hiking them. Their EPS payout ratio is also not what I prefer it to be. Having said that, if you are living in Switzerland, then this might be a safe and stable dividend income-play for you.
However, Zurich Insurance Group might not be so interesting for most foreign investors if they are also confronted with a 35% dividend withholding tax.
12. NN Group NV
|Years Dividend Growth / Remain||10||EPS Payout Ratio||53.18%|
|5 Yr Avg Dividend Growth||30.53%||Credit Rating||A (S&P)|
|Google Ticker Symbol||AMS:NN||ISIN||NL0010773842|
NN Group NV was founded in 1963 after a merger and it is one of the largest insurance and asset management companies in the Netherlands. The company was for a long time part of ING NV, the biggest bank in the Netherlands, but in 2013 the company was spun-off and listed on the stock exchange.
Since then the company had a really strong performance and it just shows that the company is better of on its own. Actually, most of you will probably know this company from their subsidiary Nationale Nederlanden.
As you can see, the company had a stellar dividend growth over the past 5 years. But don’t be misled by it, because NN has just started to pay a dividend few years ago. It is very unlikely that the company will be able to repeat that in the upcoming 5 years.
Having said that, NN Group has a very nice progressive dividend policy which is really shareholder friendly. They are also committed to using other capital allocation tools like buying back shares when it makes sense.
What I like the most is that they reinstated their dividend in 2020 as soon as the regulators allowed it. This has prevented that NN Group NV had to cut their dividend this year due to the corona virus.
NN Group is for me one of the most interesting high yield European stocks in this list and I am considering to add it into my desired portfolio.
13. Munich Re
|Years Dividend Growth / Remain||50||EPS Payout Ratio||112.39%|
|5 Yr Avg Dividend Growth||4.81%||Credit Rating||Aa3 (Moody’s)|
|Google Ticker Symbol||ETR:MUV2||ISIN||DE0008430026|
Munich Re is one of the biggest reinsures in the world and it was founded in 1880 by Carl von Thieme. Yes, you read that well. He indeed founded first Munich Re and 10 years later Allianz SE. I believe he deserves a picture on our walls if we want to be considered European Dividend Investors 😉
Fast forward to today: Munich Re earns its money via Reinsurance, Primary Insurance (ERGO) and Asset Management. It is also realistic about its future and heavily investing and co-innovating with potential start-ups so that it secures its seat in the future. Not sure if they will be successful, but they for sure won’t be surprised.
Munich Re is also 3rd in the list of the Noble 30 due to its track record of increasing or maintaining their dividends for the last 50 years.
It is also a company I already dearly hold for several years and I typically buy it on the dip. It has very strong credit ratings and this is mainly because of their excellent capital allocation strategy supported by a strong balance sheet.
Don’t expect a lot of capital appreciation from this high yield European stocks, but it might just serve you as a very stable income-play.
14. Danone SA
|Dividend Yield||3.91%||Sector||Consumer Staples|
|Years Dividend Growth / Remain||32||EPS Payout Ratio||72.16%|
|5 Yr Avg Dividend Growth||6.96%||Credit Rating||Baa1 (Moody’s)|
|Google Ticker Symbol||EPA:BN||ISIN||FR0000120644|
Most of us know Danone as a French company, but actually it has its roots Barcelona (Spain). It was founded by Isaac Carasso back in 1919 who at the time introduced a new product that was known for its health benefits: yoghurt.
Danone’s growth throughout history has been really strong which has resulted in a quite diversified business. It’s not just dairy anymore, because a large part of their revenues comes from bottled water (i.e. Evian).
This is also on of the main reasons why the company has entered this list, because the impact of covid-19 led to restaurants closing down. This in turn resulted in weak bottled water sales which has impacted Danone’s bottom line.
I’m not afraid of this though and I currently find Danone one of the most undervalued companies on the European stock exchanges. The company is also a strong dividend grower, because the company ranks number 8 in the Noble 30 Index when measured by their dividend growth track record.
Having said that, Danone might not belong on this high yield European stocks list depending on the day and the price action. The stock is juggling just around the 4% yield level and today the company yields 3.91%. Please, don’t be to tough on my with this one 😉
15. British American Tobacco Plc
|Dividend Yield||7.71%||Sector||Consumer Staples|
|Years Dividend Growth / Remain||20||EPS Payout Ratio||75.96%|
|5 Yr Avg Dividend Growth||6.77%||Credit Rating||Baa2 (Moody’s)|
|Google Ticker Symbol||LON:BATS||ISIN||GB0002875804|
British American Tobacco was founded in 1902 after a joint venture of Imperial Tobacco Company (UK) and the American Tobacco Company (US). As the name suggests, it’s still today in its core a tobacco company selling a wide range of cigarettes brands.
Currently the company is one of the largest cigarettes producers in the world after its acquisition of Reynolds American back in 2017. Most of you will know the company via its iconic brands Camel, Lucky Strike and Dunhill. Or if you are on to the new vaping categories then you might know it via their Glo brand.
The company is also a strong dividend payer and it has been growing their dividend for the last 20 years. This has earned the company a spot in the Noble 30 index at place 30.
What I like about sin-stocks is that many people hate them and that only few people want them in their portfolio’s. Unfortunately that’s the case with me as well, because my wife doesn’t allow me to purchase them.
Having said that, this is maybe one of the main reasons why this stock might give you a high yield and on top of that some opportunities for price appreciation. I don’t think it deserves much less than a Price to Earnings multiple of 10, but it will need to make some breakthroughs on entering the US market with their new vaping and heating products first.
Final thoughts about these high yield European stocks
The stocks listed in this article are not buy-recommendations. Some of them might be overvalued, others fairly valued and some of them undervalued. This list rather serves as inspiration to investors who are looking for some additional high yield European stocks in their portfolio.
Though, I did give my opinion regarding some of those stocks based on the knowledge that I currently have. Especially when I felt a strong need to give you a warning as is currently the case with Bayer AG.
I hope that you enjoyed reading this article about high yield European stocks. If you did, please give it a like or leave your comments. I am always open for feedback and I just love your engagement 🙏
European Dividend Growth Investor
DISCLOSURE: I’m long ETR:BAYN, BME:ENG, ETR:MUV2, BME:REE, ETR:BAS, EPA:BN