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European best dividend-paying stocks
European best dividend-paying stocks


We continue our fall series of reviews on reliable dividend stocks. We are looking for companies whose dividends are not only high but also consistent with profits and are steadily paid over the years. Long-term investors seek dividend stocks as a source of passive, non-speculative income. But it is vitally important to find a balance between the size of dividend and the investment’s overall risk level.

Today we’re talking about European companies meeting the following conditions:

— The dividend is steadily paid for at least last 7 years.

— The dividend does not exceed the company’s profits. In other words, the company’s P/E ratio multiplied by the dividend payout ratio does not exceed 100%.

— The company has a P/E ratio of at least 3. That means the company is not extremely undervalued.

— The company has a market cap of at least $140M.

 If the company’s shares fell over the year, the slide was not more than 60%.

It turned out that today in Europe there were far fewer truly high-dividend companies meeting these conditions than in the US. The dividend yield spread in the final sample was 7–10% against 10–12% in the US, and the P/E ratio spread was 4–15 versus 3–9 for the American companies. However, these scores are considered quite good as well. Another thing that is somewhat noteworthy is the national composition of the rating: it does not include any companies from such economies as Great Britain and France, but it does include businesses from the Netherlands and Poland, two for each country, as well as companies from Portugal, Estonia, and Guernsey, which is a Crown Dependency.

Stock charts use the currencies of the respective exchanges. The companies’ market capitalization and turnover are shown in euro (exchange rate adjusted). The review is based on data from https://www.google.com/finance. The letter "M" stands for millions, "B" for billions.

1. Kas Bank

The Kas Bank headquarters

— Symbol: KA

— Exchange: Euronext Amsterdam

— Country: Netherlands

— Currency: EUR

— Market cap: €155M

— Annual turnover: €33M

— P/E ratio: 6.6

— Dividend yield: 9.8%

— Payout ratio: 64%

— Consecutive years of dividend payment: >17

— Share price change YoY: +24%

Description. A specialized European bank providing financial and administrative services for institutional investors and financial institutions such as banks, pension funds, insurance companies, investment funds, etc. Besides the Netherlands, the company operates in Germany, Belgium, and the UK.

Chart. The company’s shares were relatively high in 2015, but then experienced a significant drop, and now are slowly climbing back again. Dividends are usually paid twice a year, 2016 being the only exception with a single payment (compensated in 2017). Their size is very stable at about €0.64 a year.

Pros. Highest dividends in this review with a long record of consecutive payment, low P/E ratio, good share price trend since the end of 2016.

Cons. Relatively small size of the company.

2. Volta Finance

Guernsey island

— Symbol: VTA

— Exchange: Euronext Amsterdam

— Country: Guernsey

— Currency: EUR

— Market cap: €265M

— Annual turnover: €19M

— P/E ratio: 4.5

— Dividend yield: 8.4%

— Payout ratio: 38%

— Consecutive years of dividend payment: >10

— Share price change YoY: +4%

Description. A closed-ended fixed income mutual fund investing in corporate credits, sovereign and quasi-sovereign debt, residential mortgage loans, and other fixed income markets. The company is located in the dwarf insular state of Guernsey, which belongs to the British Crown dependencies, but is not part of the UK.

Chart. The Volta Finance shares hit an all-time high of €10.2 in 2006 (not shown in the chart), but then collapsed in 2008 and are now slowly regaining value. In 2017, the shares were the closest to the previous record, reaching €7.7. The company pays dividends 2 or 3 times a year, about €0.6 in total.

Pros. High and stable dividends, good payout ratio, very low P/E ratio, long-term positive share price trend.

Cons. No significant disadvantages were found.

About our previous forecasts. Volta Finance was featured in our similar review on undervalued dividend-paying stocks in April 2016. At the moment we ranked its investment attractiveness as high, and our optimism turned out to be justified. Since then the stock went up from €6.1 tо €7.35, and dividends were paid 5 times for a total of €0.77. The resulting profit for investors amounted to €1.82—2.02 per share (about 20% per annum).

3. Robyg

Layout of residential complex by Robyg

— Symbol: ROB

— Exchange: Warsaw Stock Exchange

— Country: Poland

— Currency: PLN

— Market cap: €261M

— Annual turnover: —

— P/E ratio: 8.6

— Dividend yield: 8.3%

— Payout ratio: 70%

— Consecutive years of dividend payment: >6

— Share price change YoY: +7%

Description. A Poland-based development company best known for its residential complexes on the outskirts of Warsaw and Gdansk. The company recently began construction of new facilities outside of Jagodno and Wroclaw. Robyg SA has many subsidiaries, including MK Development, Robyg Development, Kuropatwy Park, Inwestycja 2016, and Jagodno Estates.

Chart. The shares set a historical record this year, and still are climbing up. Their size depends on the share price, but in 2016 it grew particularly fast.

Pros. High and growing dividends, long-term positive share price trend, low P/E ratio.

Cons. Shortest history of dividend payments in this review.

4. Wereldhave

Wereldhave office

— Symbol: WHA

— Exchange: Euronext Amsterdam

— Country: Netherlands

— Currency: EUR

— Market cap: €1.6B

— Annual turnover: €268M

— P/E ratio: 11

— Dividend yield: 7.7%

— Payout ratio: 85%

— Consecutive years of dividend payment: >18

— Share price change YoY: −9%

Description. A real estate investment company. The company primarily invests in modern buildings located in major metropolitan areas, shopping centers, and industrial facilities. Wereldhave is also engaged in the development, sales, and leasing of commercial property in the Netherlands, Belgium, Finland, France, Spain, the United Kingdom and the United States. The company’s main subsidiaries are Wereldhave Finland, Urbagreen, Wereldhave Management Holding, Relovast BV, Wereldhave UK Holdings.

Chart. Unlike most other companies in this review, Wereldhave cannot boast of either long-term or even short-term growth of shares price. The stock hit an all-time high in 2013 during the peak of the real estate bubble. After the stock market crash of 2008 the shares not only did not recover but actually continued their gradual decline. Now Wereldhave is traded near the historical low, lower than in 2009 and approximately at the same level as in 2012. Nevertheless, the company pays dividends very steadily, and their size is typically about €3.3 per year, which is especially advantageous now, considering how cheap the shares are.

Pros. Huge and stable dividends with the longest record of consecutive payment in this review, large company size.

Cons. Long-term negative share price trend.

5. Grupo Media Capital

TVI channel logo

— Symbol: MCP

— Exchange: Euronext Lisbon

— Country: Portugal

— Currency: EUR

— Market cap: €266M

— Annual turnover: €174M

— P/E ratio: 13

— Dividend yield: 6.7%

— Payout ratio: 89%

— Consecutive years of dividend payment: 10

— Share price change YoY: +43%

Description. The largest media corporation in Portugal. The company owns the TVI channel and a number of radio stations. Grupo Media Capital is the official distributor of the 20 Century Fox and Metro-Goldwyn-Mayer studios production in Portugal.

Chart. Grupo Media Capital shares are quite volatile. Their historic record of €8.7 was set in 2007, but by 2013 the stock retreated by an order of magnitude to €0.84 and is now traded at € 3.15. The company pays relatively high dividends once a year, usually around 5–9%. The only exception was 2011, a crisis year for the company when they fell below 4%.

Pros. High dividends, positive share price trend.

Cons. Relatively high P/E ratio.

About our previous forecasts. Grupo Media Capital was featured in our similar review in April 2016. Then we estimated its investment attractiveness as relatively low compared to other companies in the review (which, generally speaking, was all pretty attractive). It turned out that we were too cautious. In April 2016, the shares of Grupo Media Capital cost an average of € 2.8 and now are traded at €3.15 per share. Over the period, the company had once paid dividends of € 0.21. Thus, investors could receive a profit of € 0.56 per share (about 20% for 1.5 years, 13% per annum).

6. Tallinna Kaubamaja Grupp

Tallinna Kaubamaja logo

— Symbol: TKM1T

— Exchange: NASDAQ OMX Tallinn

— Country: Estonia

— Currency: EUR

— Market cap: €387M

— Annual turnover: €598M

— P/E ratio: 15

— Dividend yield: 6.6%

— Payout ratio: 99%

— Consecutive years of dividend payment: 12

— Share price change YoY: +28%

Description. A diversified group of companies, best known in Estonia in the retail sector, but operating in other sectors as well. The group is engaged in the sale of food products, convenience goods, beauty and fashion products, markets footwear and car supplies at wholesale prices, and deals with the management and maintenance of real estate.

Chart. The Tallinna Kaubamaja shares were quite stable in 2010–2015, almost always staying between €4.5—7, but since 2016 the stock is climbing up quickly, recently reaching €10. The company pays dividends twice a year; their size depends on the share price but is consistently high (2014 being the only exception).

Pros. High dividends with a relatively long record of consecutive payment, positive share price trend.

Cons. Highest P/E and payout ratios in the review.

About our previous forecasts. The group was featured in our similar review in August 2016. At the time, we ranked its investment attractiveness as average, but the company, like Grupo Media before, has surpassed our expectations: its investors received really good profits. In August 2016, the shares were worth around €7.4 and now are traded at €9.55. Over the period, there has been one dividend payment of €0.63. Thus, investors received a profit of €2.78 per share, or about 30% per annum (!).

7. Asseco Poland

Asseco Poland office

— Symbol: ACP

— Exchange: Warsaw Stock Exchange

— Country: Poland

— Currency: PLN

— Market cap: €1.1B

— Annual turnover: —

— P/E ratio: 14

— Dividend yield: 6.6%

— Payout ratio: 92%

— Consecutive years of dividend payment: 12

— Share price change YoY: −16%

Description. A Poland-based integrator of IT solutions, offering software and hardware consultancy, data communication infrastructure, administrative services, and supply of software and hardware. The company provides its solutions for the banking sector, insurance institutions, utility sector, telecommunication, healthcare, local administration, agriculture, uniformed services, and international organizations and institutions. Besides Poland, Asseco operates in Balkan countries, Germany, Slovakia, Israel and on other markets.

Chart. The Asseco Poland shares were relatively high in 2015–2016, but have slipped by a quarter by now. The company pays dividends once a year; their size depends on share price, but at the moment is particularly high.

Pros. High dividends with a relatively long record of consecutive payment, relatively large company size.

Cons. Relatively high P/E ratio, negative share price trend in 2016–2017.

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