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Market Wrap-up for Mar. 5 - Time to Consider European Dividend Stocks

Stoyan Bojinov Mar 05, 2015


European equity markets have been climbing higher since the ECB formally announced extensive stimulus efforts on January 22nd of this year. Since then however, investors still hadn’t seen any meaningful evidence that a real recovery was in fact taking root — until now, that is.


On Thursday morning, the European Central Bank lifted investors’ hopes for the otherwise gloomy currency bloc when it announced that it had raised its economic growth forecast for the year. The ECB lifted its GDP forecast from last year’s 0.9% to 1.5% in 2015; granted this isn’t a monumental improvement by any stretch, but it’s still an encouraging sign to see prospects of accelerating economic growth for a region that has long been plagued with anemic growth.

The ECB also lifted it’s 2016 and 2015 GDP growth prospects to 1.9% and 2.1% respectively. The central bank did however emphasize that inflation will likely remain near zero in light of its loose monetary policy and recent collapse in oil prices. In other words, the eurozone isn’t out of the woods just yet, but policymakers do think that economic growth will indeed make a comeback in 2015.


Consider High-Quality European Dividend Payers


In addition to improved growth prospects helping to lift equity markets, as well as investors’ confidence, overseas, the stimulus efforts announced in January will officially kick off this coming Monday, March 9th. As a reminder, the ECB plans to embark on a bond-buying stimulus program totaling upwards of $1 trillion that will run through September 2016.

In light of improving growth prospects and upcoming stimulus efforts, we feel it’s the right time to consider European stocks; more specifically, we want to focus on high-quality, dividend-paying stocks that conservative investors may want to gain exposure to in an effort to geographically diversify their portfolios.

Below, we highlight five fundamentally-sound sound European dividend stocks that can help beef up your’s portfolio’s overall yield:

  • Novo Nordisk (NVO ): Based out of Denmark, this diversified pharmaceutical maker has been raising its dividend for 18 years in a row.
  • Ace Limited (ACE ): Headquartered in Switzerland, this global insurance and reinsurance provider has been raising its distribution for 6 years in a row.
  • Covidien (COV ): Headquartered in Ireland, this globally diversified healthcare products company has been raising its dividend for 6 years in a row.
  • Anheuser-Busch InBev (BUD ): This Belgium-based beer maker has been growing its distribution for 5 years in a row.
  • SAP AG (SAP ): This Germany-based enterprise software behemoth has been growing its dividend for 4 years in a row.


The Bottom Line


With the ECB launching a massive stimulus program, coupled with improving growth prospects, we feel the time is right to consider dividend-paying companies from the overseas currency bloc. By focus on fundamentally-sound companies with a history of dividend raises, investors can diversify their portfolios geographically without necessarily taking on excessive risk that is often times associated with foreign equities.

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