Being a European dividend investor isn’t just about dealing with withholding tax. Access to popular Dividend ETFs like Vanguard’s $VIG or Schwab’s $SCHD is also limited, making it more challenging to build a well-diversified dividend portfolio.

But that doesn’t mean we give up!

Today, I want to share my thoughts on several of the 18 Dividend UCITS ETFs I’ve studied as potential SCHD alternative. The good news is that all of them should be accessible to European dividend investors.

Before diving in, it’s important to understand my approach to analyzing Dividend UCITS ETFs. It’s quite similar to how I evaluate individual stocks, as I want my investments to compound over time.

I look for an attractive dividend yield (>2.75%) and consistent year-over-year dividend growth. Ideally, the dividend yield plus the five-year compounded annual dividend growth rate exceeds the Chowder rule threshold of 12.

Whether this is a realistic expectation for a Dividend UCITS ETF remains to be seen – so let’s take a look at the visual below!

Note: a SCHD ETF Europe from Schwab is unfortunately not available to European investors due to regulatory restrictions, as US-domiciled ETFs do not comply with EU PRIIPs regulations. But check the FAQ at the bottom of this article for possible workarounds.

At this time, no dividend UCITS ETFs in their native form meet the Chowder rule criteria based on my analysis. However, three ETFs come closest to the overall performance benchmark:

• $FUSD – Fidelity US Quality Income UCITS ETF USD
• $ISPA – iShares STOXX Global Select Dividend 100 (DE)
• $TDIV – VanEck Vectors Ms Developed Markets Dividend Lead

Could these be strong alternatives to SCHD (Schwab US Dividend Equity ETF)?

There are also two others, $SEDY and $FGQI, that are close to this cohort and might also be worth considering.

That said, let’s start by reviewing the three Dividend UCITS ETFs that come closest to the chowder rule criteria.

Disclaimer: all information in this article has been last updated on 12 March 2025. Mistakes in the data might exist.

Fidelity US Quality Income ETF (USD)

The Fidelity US Quality Income UCITS ETF only exists since 2016 and it is focused on US dividend-paying companies. The fund’s goal is focused on total return, which means both income and price appreciation. It aims to achieve this by tracking the Fidelity US Quality Income Index.

I honestly like their setup a lot. On one hand, it takes some great quality aspects into consideration like the below for non-bank stocks:

On the other hand, it appeals to ESG-conscious investors by clearly outlining its exclusion criteria, which include military, thermal coal, and tobacco stocks. However, the stance on defence stocks in Europe is evolving rapidly.

From a dividend perspective, it excludes companies that do not pay dividends or have recorded negative dividend growth over the past five years. In my view, the criteria could be a bit stricter.

One thing that stood out to me is that the dividend has not grown over the past four years, and I have not found a clear explanation for this. I have reached out to Fidelity for clarification and will update this post once I receive a response.

This is especially interesting given the entire top 10 has been growing their dividends (portfolio-weight in brackets):

• Apple (6.8%)
• Microsoft (5.5%)
• Nvidia (5.2%)
• Alphabet A (3.6%)
• Meta Platforms A (2.8%)
• Broadcom (1.9%)
• Eli Lilly (1.8%)
• JPMorgan Chase (1.7%)
• Visa (1.6%)
• Procter & Gamble (1.4%)

Together, these 10 companies account for 32.30% of the total index. Most are high-quality businesses with strong tailwinds, which should support continued dividend growth in the high single to double digits.

I also appreciate its relatively low total expense ratio of 0.25%, which is uncommon for European investors. Combined with a 6.7% five-year compounded annual dividend growth rate, this results in a Chowder score of approximately 8.6% – one of the highest on the list.

Overall, the outlook for this Dividend UCITS ETF appears promising, making it a potential European alternative to VIG. However, I would still like to understand why dividends have remained flat in recent years.

iShares STOXX Global Select Dividend 100 (DE)

The iShares STOXX Global Select Dividend 100 ETF stands out for its relatively high dividend yield while maintaining a 3.91% five-year compounded annual dividend growth rate.

However, this growth rate can be somewhat misleading, as it depends on how it is measured. In this case, a single chart says more than a thousand words – it clearly shows that the ETF has historically paid a dividend between €1.00 and €1.50. Over the past three years, payouts have been at the higher end of this range, so perhaps it is establishing a new floor going forward?

The relatively flat trendline is what we may expect from this ETF after reading their KIID document. The fund’s strategy is based on tracking 3 underlying indexes:

• STOXX® Europe Select Dividend 30 index
• STOXX® North America Select Dividend 40
• STOXX® Asia/Pacific Select Dividend 30

Those indexes are based on basic criteria, such as having paid a dividend in the last five years, maintaining a non-negative dividend growth rate, and keeping a payout ratio of 60% or lower.

As a result, these loose criteria allow the inclusion of high dividend payers that grow during favorable periods but cut their dividends at the first sign of trouble.

This is likely why their top 10 holdings are filled with companies that most of us have hardly heard of:

• SITC International Holdings Ltd (5.12%)
• NatWest Group Plc (2.30%)
• HSBC Holdings Plc (2.09%)
• ABN AMRO Bank NV (2.02%)
• ING Groep NV (1.86%)
• WH Group Ltd (1.69%)
• New Hope Corporation Ltd (1.65%)
• IG Group Holdings Plc (1.59%)
• Henderson Land Development Ltd (1.56%)
• DBS Group Holdings Ltd (1.54%)

Together, they make up slightly more than 21% of the entire index. Six operate in the financial sector (primarily banks), while one is in the materials sector. These companies are also highly sensitive to economic cycles.

That said, this index could be interesting if we assume a baseline of 1 euro in dividend income and a 4% yield under that assumption. In other words, if the ETF were to trade at 25 euros per share. However, I find this scenario unlikely anytime soon.

VanEck Vectors Ms Developed Markets Dividend Lead

VanEck Vectors Ms Developed Markets Dividend Lead ETF exists since 2016. The fund aims to closely track the performance of the Morningstar® Developed Markets Large Cap Dividend Leaders Index™.

This index is focused on total-return investors who are also interested in dividend income. The criteria of the index are listed below:

These are solid criteria for a dividend ETF focused on total return. They allow for relatively high-yielding companies without raising too many concerns about dividend safety.

This is also reflected in the index’s dividend growth performance. The ETF yields 3.87%, making it one of the higher-yielding dividend UCITS ETFs I have analyzed.

That said, the ETF’s criteria are not as solid SCHD and this is evident in the impact of the 2020 pandemic when investors had to endure a ~20% dividend cut. This is mostly due to the relatively high exposure to cyclical stocks in the underlying index (like BHP, Rio Tinto and several banks.

However, the top 10 holdings look quite solid, and many of these stocks can be found in the typical dividend growth portfolios of international investors.

• Verizon Communications Inc (4.72%)
• HSBC Holdings Plc (4.46%)
• Chevron Corp (4.42%)
• Pfizer Inc (4.26%)
• Roche Holding AG (3.80%)
• TotalEnergies SE (3.22%)
• BHP Group Ltd (2.95%)
• Intesa Sanpaolo SpA (2.40%)
• Sanofi SA (2.40%)
• Allianz SE (2.37%)

The total percentage of these 10 stocks is approximately 35% of the portfolio. That said, I have two interesting notes to share with you about this index.

First, this ETF is domiciled in the Netherlands, and investment funds classified as fiscally transparent entities or investment institutions (fiscale beleggingsinstellingen, FBI) benefit from special tax treatment (to my understanding, this applies to VanEck). Under such classification, investment funds can reclaim part of the withheld dividend tax, typically 15%, preventing an additional tax burden at the fund level. When a company like vanEck distributes those dividends, it withholds a 15% Dutch dividend tax, which individual investors can offset against their income tax liability. This system helps Dutch investors avoid dividend leakage by ensuring they are not double-taxed on domestic dividends (please verify this with your tax advisor).

That said, I have heard that German and French investors may also be able to offset this against their tax liability, but again I strongly recommend checking with a tax advisor. If you are from one of these countries and can confirm or refute this, please let me know in the comments below.

Secondly, it appears that TDIV’s dividend has not grown over the past three years. I suspect this is due to a delayed effect caused by the ETF’s popularity and the rapid growth of its assets under management – in TDIV’s case, the AUM more than doubled in the last year.

What I mean by this is that when an ETF collects dividends from its underlying holdings, there can be a timing lag between when those dividends are received and when they are distributed to shareholders. If the ETF experiences rapid inflows, newly issued shares may not immediately be entitled to the same level of accumulated dividends, temporarily diluting the distribution. As a result, even if the underlying stocks are increasing their payouts, the ETF’s dividend may remain flat in the short term. Over time, this effect should normalize as the fund administrator adjusts distributions to reflect the growing dividends of the holdings.

In conclusion, this is by far my most favorite Dividend UCITS ETF that is available to me. It has the highest current Chowder rule score due to a 5.43% dividend growth CAGR which makes it 9.3% in total. In my opinion, this is a good rate of return for a passive income strategy.

These were the top 3 dividend UCITS ETF ‘s based on the Chowder rule. But as mentioned before, there are still 2 other Dividend UCITS ETFs that have a relatively high Chowder rule score. Let’s just have a look into them as well, because they might give you a better alternative.

iShares Emerging Markets Dividend UCITS ETF

The iShares EM Dividend UCITS ETF is one of the more expensive Dividend ETFs covered in this article. With a total expense ratio of 0.65%, the cost is quite high, especially considering the long-term compounding impact on future returns. For this fee to be justified, the ETF would need to deliver strong dividend growth and overall performance.

As dividend growth investors, our first priority is, of course, to see consistent dividend growth.

And this is where things get interesting. The ETF’s dividend distribution typically fluctuates between €0.90 and €1.40, which does not indicate strong dividend growth. The CAGR outcome largely depends on which years are used for the calculation, as dividends in 2020 were clearly lower than in 2024 and 2019 higher than 2024.

On top of that, investors faced a ~25% dividend cut during the pandemic, which is exactly when you’d want your income stream to remain stable. I wouldn’t be pleased with that at a time when my portfolio is already under stress.

From a dividend growth perspective, these inconsistent payouts suggest that this ETF is not well-suited for investors focused on steady and growing dividends. My view is further reinforced when looking at the top 10 holdings, which together make up 33.1% of the total index.

• Petroleo Brasileiro Pref SA (4.72%)
• China Construction Bank Corp H (4.17%)
• Cez (3.66%)
• Vedanta Ltd (3.59%)
• Evergreen Marine Corp (Taiwan) Ltd (3.44%)
• Bank of China Ltd H (3.08%)
• Cia Vale do Rio Doce SH (3.06%)
• Industrial and Commercial Bank of China (3.04%)
• Malayan Banking (2.19%)
• Astra International (2.18%)

Honestly, based on a quick screen, there’s nothing on this list that I would personally want to own as an individual stock.

On the other hand, if you believe that €0.87 per year in dividends is a reliable floor, this ETF could offer a minimum 5.7% dividend yield after accounting for the expense ratio.

You would just need to accept that dividend cuts are part of the deal. In return, you’d still receive a yield twice as high as the average Dividend ETF covered in this article. Not too bad, would you agree?

Fidelity Global Quality Income UCITS USD Inc ETF

The Fidelity Global Quality Income UCITS USD Inc ETF exists since 2017. This dividend ETF has a similar focus as its US brother discussed a little bit earlier.

In this case, it tracks the Fidelity Global Quality Income Index which is also focused on total return and uses a nearly identical set of criteria. The main difference is its geographical scope. Unlike $FUSD, this dividend UCITS ETF treats the whole globe as its scope.

However, this includes the US and it still means that US-based stocks are dominating the top 10 of this fund:

You could say this fund offers the best of both worlds, as it gives you exposure to top international dividend stocks without missing out on names like ASML, which ranks 16th on the list with a 0.69% weight. In fact, US stocks dominate the index at ~75.2%, followed by Japan (5.5%), the UK (3.3%), and France (2.2%) (data as of 13 March 2025).

However, its dividend growth doesn’t quite match up. This is where the US stands out with its strong commitment to consistent and growing dividends. That said, the fund’s annual dividend growth appears to be slowing down.

Last but not least, the total expense ratio is 0.40%, making it more expensive than $FUSD. This is certainly something to consider when weighing your options.

Overall, I see this as a high-quality Dividend UCITS ETF that almost meets my criteria from a dividend screening perspective. With that in mind, I could view this as a potential European VIG or SCHD alternative for investors looking for strong dividend exposure.

There are still 13 other Dividend UCITS ETFs that I’ve analyzed, which might be of interest to you. However, covering each one in detail would make this article quite long.

Instead, I’d like to share a concise overview that highlights some of the key metrics I consider important as a dividend growth investor. I hope this helps you in making well-informed investment decisions.

📣 Nowadays, you can buy these Dividend UCITS ETFs at low costs. Join me at Interactive Brokers and build your portfolio brick by brick!

_{Investing involves risk of loss.}

But we’re not done yet, because there are still 3 dividend UCITS ETFs which I find interesting for different reasons. Hence, let’s also look into those.

iShares UK Dividend UCITS ETF GBP (Dist)

The iShares UK Dividend UCITS ETF is one of the oldest ETFs in this list because it exists already since late 2005. The goal of this fund is to track the FTSE UK Dividend+ index. This index is designed to track the 50 highest-yielding companies in the FTSE 350, excluding investment trusts. It does not incorporate any ESG criteria in its selection process. Other key exclusion factors include:

• No dividend was paid in the last 12 months
• The bottom 5% with a negative 6 and 12 months total return
• Very low trading volumes (i.e. < 3 mln GBP)

The index is then ranked based on specific criteria, with the top 50 companies selected for inclusion.

While the fund delivers a high current yield in line with its objective, it does not prioritize consistent dividend growth. As a result, it’s no surprise that its dividend distributions tend to be inconsistent and unreliable from a dividend growth perspective.

Personally, I find this ETF interesting as a screener for UK dividend stocks. Just have a look at their top 10:

• HSBC Holdings Plc (6.29%)
• British American Tobacco (5.42%)
• Legal and General Group Plc (5.15%)
• Rio Tinto Plc (5.10%)
• Imperial Brands Plc (4.99%)
• Lloyds Banking Group Plc (4.18%)
• BP Plc (4.14%)
• NatWest Group Plc (3.97%)
• Vodafone Group Plc (3.88%)
• Aviva Plc (3.61%)

Together they make up ~46.7% of the index and there are some great dividend growers in here that I prefer to hold as individual stocks (i.e. $BATS, $LGEN, $RIO).

Last but not least, it should come as no surprise that they excluded ESG requirements. Mines and tobacco are dominating the top 10. Actually, I think it’s fair to say that this is the perfect sin-stock ETF 😎

Vanguard FTSE Developed Europe UCITS ETF

The FTSE Developed Europe UCITS ETF has been around since 2013 and is the only Vanguard ETF on this list. And who doesn’t love Vanguard ETFs? They are known for their low costs, and this one is no exception, with a total expense ratio of just 0.10%!

The fund aims to track the FTSE Developed Europe Index, which includes a mix of large- and mid-cap European stocks. It offers broad geographic exposure across Europe, with the current top 10 holdings consisting of the following companies:

• SAP Se (2.60%)
• ASML Holding Nv (2.51%)
• Novo Nordisk A/S (2.22%)
• Nestle Sa (1.86%)
• Roche Holding Ag (1.85%)
• Astrazeneca Plc (1.79%)
• Novartis Ag (1.79%)
• Shell Plc (1.75%)
• HSBC Holdings Plc (1.62%)
• LVMH Moet Hennessy Louis Vuitton Se (1.53%)

I think it’s fair to say that this is a very high-quality list from a European perspective. Actually, some of these are proud members of the European dividend aristocrats list.

But this also comes at a cost, as several of these stocks appear richly valued with a low dividend yield. On the other hand, the ETF provides a balanced mix of high-yield, low-growth stocks and low-yield, high-growth stocks.

Unfortunately, this ETF does not have a strong track record when it comes to dividend growth. Like several others, its dividend payments have been inconsistent and relatively flat over the past eight years, with a sharp drop in 2020.

While I like the quality of this UCITS ETF, I’m not totally convinced that this is the best choice to make as a dividend growth investor.

My final thoughts about investing in Dividend UCITS ETF ‘s.

I hope you found this article insightful and that it helps clarify the strengths of the different Dividend UCITS ETFs.

For me, this analysis has reinforced a lot of what I’ve been thinking. For years, I’ve considered automating part of my investment approach, but for now, nothing here fully aligns with my personal investing style.

It also serves as a reminder of how challenging it can be to invest as a European, with so many expensive and underwhelming Dividend ETFs.

That said, I do believe there are a few quality SCHD alternatives in Europe. They just lack the same starting yield compared to VIG or SCHD.

Having said that, if I didn’t have time anymore to analyze individual companies then I would probably design my portfolio as follows:

• 40% into VanEck Vectors Ms Developed Markets Dividend Lead ($TDIV) – the best Dividend UCITS ETF with relatively good dividend growth
• 30% into iShares UK Dividend UCITS ETF GBP ($IUKD) – high current dividend by companies I know
• 30% into FTSE Developed Europe UCITS ETF ($VEUR) – exposure to high-quality European stocks

This would give me a nice mixture of dividend yield (avg: 4.08%) vs dividend growth (5 yr CAGR: 2.04%). At the same time, there is not that much overlap between these 3 Dividend UCITS ETFs when it comes to their core holdings. Though, I could still improve this by swapping VEUR with FUSD.

You can buy these at Interactive Brokers at low costs (open an account).

_{Investing involves risk of loss.}

That’s it from my side. I’ve covered 7 out of the 18 Dividend UCITS ETFs I researched, while the other 11 are listed above. If you’re curious about any of those, feel free to reach out.

I chose not to discuss them further because their performance seemed subpar compared to the others, and I also wanted to keep this article concise.

That said, I’d love to hear your thoughts. Let me and the community know what you think in the comments below.

#FromTheCommunityForTheCommunity 🙏

Yours Truly,

European Dividend Growth Investor

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