It’s Income Week across Morningstar’s European editorial websites, so we’ve got the map out to look at high-yielding dividend opportunities at some of Europe’s biggest companies.
Readers may remember our 2023 version of this piece – produced for last year’s Income Week – but much has changed since then. Last time, most people would have agreed inflation was still “high”. In the UK, it’s now sitting just above the Bank of England’s 2% target at 2.3%. Across the eurozone itself, it’s only slightly higher – at 2.4%.
The war on price rises has made progress, then, but that’s not the only thing that’s changed.
The overall economic picture across Europe does now seem slightly brighter too. Just yesterday, S&P Global’s provisional purchasing manager index survey rose to 52.3% for May 2024, from 51.7 in April. In the UK, the short-term economic outlook also looks slightly more certain. It’s clearly certain enough for the prime minister to call a Summer election.
Despite the obvious positives, income remains crucial to retail investors’ portfolios and, as far as equity investors are concerned, dividends are still a huge part of the picture.
Over the past year, the trend has been one of stable dividend growth across Europe, new dividends in the US (notably at Facebook owner Meta [Meta]), and, overall, the onward march of share buyback programmes as company boards bolster their share prices by rewarding investor patience.
To identify the companies in the below map of highest-yielding dividend stocks stocks, we used Morningstar Direct to select European companies that have paid dividends at some point since the start of 2022, and have an expected dividend “yield” (the formula used to calculate yield is to divide the annual dividend amount paid by a company per share by its current share price).
Across the UK and eurozone, investors can expect large dividend yields from a variety of larger and smaller companies. A word of caution: this is not necessarily a good thing long-term, as smart investors will look for sustainable sources of income from companies with good balance sheets and compelling economic moats.
Beginning with the UK, the three highest-yielding dividend stocks for sale to investors include Ithaca Energy (ITH) with a yield of 18%; TORM (TRMD A) with a yield of 15%, and Phoenix Group (PHNX) whose dividend yield is 10%. Across the Eurozone, Germany, France, and Spain lead the yielders league table, with Deutsche EuroShop (DHRPY), France’s Icade (ICAD), and Spain’s Enagas (ENG) yielding 24%, 17%, and 15%, respectively.
