Investing

5 European Dividend Aristocrats Offer Huge Income and Growth Potential

With September and the third quarter almost over, many investors are looking to the fourth quarter and beyond. While there is some hope that a total return to normal finally could be achieved by next year, one thing is for sure: the stock market is very overbought and some of the momentum stock trades are very crowded and have been hit hard, as we saw last week. With interest rates remaining very close to generational lows, top-quality dividend stocks may be the way to go for the rest of the year and in 2022.

Often when income investors look for companies paying big dividends they are drawn to the Dividend Aristocrats, a group of stocks we have written about frequently. We were intrigued by the top European Dividend Aristocrats, which have a set of rules for entry that vary from their American counterparts. European companies qualify as Dividend Aristocrats under the following conditions:

  • An S&P Europe 350 Index member
  • Ten consecutive years of increasing dividends
  • A float-adjusted market capitalization of at least US$ 3 billion
  • A median daily trading volume of at least US$ 5 million


Ten years is far less than the 25 years required by S&P 500 companies. Typically, this is because European companies do not value the dividend in the same manner as American companies. In fact, European companies tend to have a more conservative approach to rewarding shareholders with dividends.

We screened the top 15 European Dividend Aristocrats looking for the most liquid and well-known names for investors who are looking for income and a degree of diversification away from the American indexes. We also screened the BofA Securities European equity research database and found five of the top companies in the index that were Buy rated. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

British American Tobacco

This conglomerate got much bigger with the acquisition of Reynolds American in 2017. British American Tobacco PLC (NYSE: BTI) provides tobacco and nicotine products to consumers worldwide. It offers vapor products, tobacco heating products and modern oral products; combustible products; and traditional oral products, such as Swedish-style snus and American moist snuff. The company distributes its products to retail outlets.

The company’s New Categories business, which includes products outside of traditional cigarettes, saw revenues increase 50% to £942 million in the first half of 2021. The company has noted recently that non-combustible products, such as its Vuse vaping brand and Glo heated tobacco brand, now make up almost 12% of total operations.

British American Tobacco stock investors receive an 8.12% dividend. BofA Securities has a $50 price target on the shares, and the Wall Street consensus target is $50.06. The stock closed on Friday at $36.51 a share.