It’s no secret that Europe is struggling. Since the Great Recession, the Old Country’s economy hasn’t exactly gone gangbusters. We’ve seen bailouts, double- and triple-dip recessions, massive unemployment and general economic malaise. Events like the Brexit aren’t helping either. So … how has all of this affected European dividend stocks?
European stocks — as measured by the Vanguard FTSE Europe ETF (NYSEARCA:VGK) –- are down 7% over the last five years. But for those looking for dividends, that could be the kind of discount you’ve been waiting for.
See, the thing is, the vast bulk of Europe’s firms are giant multinational corporations. They get just as much — if not more — of their revenues from sources outside of Europe. And sales continue to be good. It’s the domestic economy that is bad. The discount on European stocks has helped push up dividend yields in the nation to a tantalizing 3.66% for the VGK. That’s 1.5% higher than the dividend on the S&P 500.
For investors, Europe continues to be the best place to snag-up high quality, multinational dividends at a discount to the United States.
Here are three of the biggest dividend buys in Europe.
Big Dividend Stocks to Buy in Europe: Unilever plc (ADR) (UL)
Dividend Yield: 2.9%
Dove soap, Hellman’s mayonnaise, Q-tips … these are all brands most people are familiar with. In fact, you probably use some of these brands yourself. But what they really are is a perfect example of how Europe’s multinational products are everywhere.
Owning these bands — and over 400 others — is consumer products giant Unilever plc (ADR) (NYSE:UL). The beauty for UL is that these brands are sold in 190 countries and that emerging markets make up 58% of its €53 billion in sales. It’s as multinational as it comes.
With the euro dropping versus the dollar, Unilever has been able to pick-up some extra boosts thanks to the weakened currency. Last year, UL managed to realize an extra 3% growth in earnings solely based on beneficial currency movements.
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%.
With the firm continuing to see rising sales in non-European markets and its home currency dropping, UL should have no trouble keeping the dividends going throughout the future.
Big Dividend Stocks to Buy in Europe: Anheuser Busch Inbev SA (ADR) (BUD)
Dividend Yield: 3.64%
Budweiser and baseball. It’s as American as, well Budweiser and baseball. Except that Budweiser isn’t exactly American, it’s owned by Belgium brewing giant Anheuser Busch Inbev SA (ADR) (NYSE:BUD).
BUD is the world’s brewing kingpin and sells its beer in more than 100 countries. It features a stable of brands that generate an excess of a billion each in sales. This includes its namesake Budweiser, Corona and Stella Artois. That fact has helped Anheuser Busch generate revenues of more than $43 billion last year.
But the brewing giant isn’t resting on its laurels. The firm has continued to plow big bucks into local and smaller craft brewers in the U.S., and it has recently taken on adding “near-beer” or healthy beer choices to its arsenal.
As if that wasn’t enough, BUD has decided to take out its largest rival SABMiller plc (ADR) (OTCMKTS:SBMRY). That $106 billion buyout was cleared by the Justice Department on Wednesday and will instantly add sales and exposure to emerging markets.
Ultimately, it’ll add to BUD’s cash flows and dividend potential. Not that it needs help here. Anheuser Busch has managed to consistently grow its dividend over the last six years since becoming one firm and currently yields 3.64%.
Big Dividend Stocks to Buy in Europe: Total SA (ADR) (TOT)
Dividend Yield: 5.66%
When we think of the major oil companies, names like Exxon Mobil Corporation (NYSE:XOM). However, Europe is full of some big-time energy stocks that pump out major dividends as well. One of the best happens to be France’s Total SA (ADR) (NYSE:TOT).
TOT is nearly as big as XOM in many regards and features numerous assets across the world. That includes everything from major oil fields to pipelines and refining capacity. And those assets have been performing better than many of its peers as of late. During the oil crash of last year, TOT’s net income only fell by 18% versus declines north of 40% for some rivals.
The key has been the timing of Total’s CAPEX spending. The firm quickly put on hold several major oil projects or finished projects it had started just as oil was peeking. That meant that the major didn’t have to keep shelling out big bucks to complete them. As a result, TOT’s hefty 5.66% dividend yield is/was perhaps safer than some of the other super majors.
Yet, TOT trades for a discount verses them. Total can be had for trailing 12-month price-to-earnings ratio of just 28. XOM can be had for a P/E just north of 30, while Chevron Corporation (NYSE:CVX) can be had for a whopping 152.
As of this writing Aaron Levitt did not hold a position in any of the aforementioned securities.