Why These 5 European Dividend Aristocrats (Some With Huge Yields) Are Incredible Q3 Buys

Well, that didn’t last long. As we suspected, each and every market rally until the Federal Reserve completes the interest rate hike cycle likely will be met with selling as investors try to go to cash and get away from the market’s downward spiral. That is why it may make sense to look to Europe for some ideas now, as economies there are doing somewhat better, and the inflation rate across Europe is lower than in the United States.

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

A decade is far less than the 25 years required by companies in the U.S Dividend Aristocrats, but 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 in the BofA Securities European equity research database, seeking the most liquid and well-known names for investors looking for income and a degree of diversification away from the American indexes. The five top stocks we found all were rated Buy, but 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 solidly over the past two years.

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