This is really a great season to be in. FY2019 earnings are being published and for many European companies this is the time that their dividend proposals are announced.
So, how did the European Dividend champions* do then? Firstly, I will especially look at the companies from my example European dividend champions portfolio. After that I will list few other European dividend champions that have raised their dividends and that I’m aware of.
* Note: a dividend champion in Europe is a company that increased or retained its dividend for at least 10 consecutive years. Personally I’m mainly listing stocks that have not cut their dividends back in 2008/2009 during the great financial recession.
Royal Dutch Shell Plc
Royal Dutch Shell $RDSA is an Integrated Oil & Gas company. It is British-Dutch by origin, headquartered in the Netherlands and incorporated in the United Kingdom. It was the third-largest company in the world measured by 2018 revenues.
Shell reported pretty weak earnings on 30-January. I was especially not satisfied with their drop in cashflow compared to earlier quarters and 2018.
The dividend however was remained at 0.47 USD per quarter or 1.88 USD per year. The dividend has therefore remained the same since since May 2014 and has not been cut since the second world war. I don’t see any reason why they would cut it now. In my opinion the dividend is still pretty save.
At current prices the dividend spots a yield of 7.1%. I believe a fair value of Shell is hard to calculate as it heavily correlates with the oil price. Having said that, any time Shell dips under 25 Euro is for me a consideration to further add to my position because I believe in the future prospects of the oil industry (oil demand is still rising due to for instance global population trends) and Shell’s transition into a broader energy company.
I purchased additional shares on 31 January @ 24 Euro. This increased my position size with 20%.
Diageo Plc ($LON:DGE) is one of the largest producers of spirits and beers in the world. Diageo is headquarterd in London and you might know it from having consumed some of their brands, i.e.: Smirnoff, Johnnie Walker, Baileys and Guinness.
Also Diageo reported some pretty weak numbers, in their case H1 2020. Overall they had approxamitely 4% growth, which is not bad for a company that large, but it was generally below expectations. I believe that some of the reported headwinds (i.e. performance India / LATAM) are of short-term of nature.
The good thing is that they increased their interim dividend again by 5% to 27.41 pence per share (69.88 pence TTM yearly dividend). This was their 23th consecutive dividend increase which is a pretty amazing track record.
At current prices the dividend spots a 2.34% dividend yield.
The stock will go ex-dividend on the 27th of February and will pay the dividend on the 28th of February.
I’m currently not intending to initiate a position in Diageo Plc. I find the current valuation metrics still a bit too pricey although the share price has been on a slight decline since its peak in September 2019. I do see it though as a future portfolio member!
Roche Holding Ltd
Roche Holding Ltd ($SWX:ROG) is a biotech company with both a pharmaceuticals and diagnostics division. Roche is probably best known for its strength in oncology with drugs like Avastin and Herceptin.
Roche really had an amazing FY2019 earnings report. The company seems to be firing on all cylinders. Their overall sales increased with 9% and their core EPS increased +13%. These are huge numbers for a company with a history and the size of Roche.
Roche also proposed a dividend of 9 CHF +3,4% which I find a bit timid. It does mean that their pay-out ratio has declined to a healthy 44% which should give it ample room to grow its dividend in the upcoming year.
This was its 33rd consecutive dividend increase and it now yields 2.75%.
The stock will go ex-dividend on the 19th of March and will pay the dividend on the 23rd of March.
I consider this to be a great addition to my portfolio and I will do some further analysis to assess the current fair value of the stock.
Novartis AG ($SWX:NOVN) is like Roche Holding a pharmaceutical company and also located in Basel and they are literally on 3 KM distance from each other. Novartis saw a strong FY 2019 and their sales grew by 9% which resulted in an increased EPS of 17%.
They announced to increase their dividend by 4% to CHF 2.95 per share. This was their 25th consecutive dividend increase but their dividend growth has been slowing in the last few years. The dividend payout-ratio will be 56%, which gives it enough room for future growth.
At current prices the dividend spots a 3.23% dividend yield.
The stock will go ex-dividend on the 20th of February and will pay the dividend on the 18th of March.
I do foresee a small position size of Novartis in my portfolio. I like the company, but I will need to do some further analysis to assess the current value of the stock.
Other European Dividend Champions
H & M Hennes & Mauritz AB ($STO:HM-B) announced that their dividend remains unchanged at SEK 9.75, which means a payout-ratio of 120.17% and a dividend yield of 4.61%. H&M hasn’t cut its dividend since 1974.
Louis Vuitton Moët Hennessy ($EPA:MC) announced that their dividend will increase to 6.80 Euro, which is an increase of 13%. LVMH has paying a growing dividend for more than 20 years. The payout-ratio will be 47.72% and the dividend yield 1.72%.
Philips NV ($AMS:PHIA) proposes a dividend of 0.85 Euro which is in line with last year. Philips hasn’t cut its dividend for the last 19 years, but it’s worth mentioning that the dividend only grew 20% in the last 10 years. The payout-ratio is 42% and the stock yields 2.05%.
These were the dividend announcements of European Dividend Champions that I’m aware of. Let me know if I missed a European stock which increased or maintained its dividend for at least 12 years.
I hope that you enjoy this summary.
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Enjoy the weekend!