Accessing European Companies with a History of Stable Dividend Growth

Jim D. Woodward, CC BY 2.0

(Note: Third in a series on Europe-focused ETFs)

During times of market tumult, many investors choose to purchase shares in companies that have a history of stable dividend growth to secure reliable dividend payouts.

Studies by Ned David Research, among others, have lent empirical support to this strategy as scholars have found that both domestic and international companies whose dividends increased year-over-year for the past 20 years outperformed companies whose dividends either remained flat or decreased. A problem with this plan is discovering the companies that have such a history, as predicting which ones are best suited to endure the unpredictable shocks that the world generates without cutting or eliminating the dividend payouts.

While it seems like everyone has his or her own strategy with regards to finding these companies, no one has the panacea to this problem. If finding domestic companies with such a history is difficult, finding companies beyond the borders of the United States is even more so.

Part of the problem is that many foreign companies that fit the bill are far from household names, at least in the United States. Thus, they may lack the reputation that a stable-dividend-paying American company may have.

Thankfully, an exchange-traded fund (ETF) called the ProShares MSCI Europe Dividend Growers ETF (BATS: EUDV) exists to simplify such an undertaking. EUDV tracks an index of European companies that have a history of stable dividend growth.

To avoid excessive risk-taking as a result of having a limited amount of holdings, all of the assets in EUDV’s portfolio are given equal weight. Some of this fund’s top holdings include UCB S.A. (OTCMKTS:UCBJF), SEB SA (OTCMKTS:SEBYF), DSV Panalpina A/S 1.75% 20-SEP-2024, Ashtead Group plc (OTCMKTS:ASHTF), Partners Group Holding AG (OTCMKTS:PGPHF), Legal & General Group Plc (OTCMKTS:LGGNY), St. James’s Place Plc (OTCMKTS:STJPF) and SSE plc (OTCMKTS:SSEZY).

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This fund’s performance has risen after the recent market downslide. As of July 21, EUDV has been up 4.99% over the past month and 22% for the past three months. It currently is down 3.59% year to date.

Chart courtesy of www.stockcharts.com

The fund has amassed $7.86 million in assets under management and has an expense ratio of 0.55%. It offers a current dividend yield of 1.59%.

While EUDV does provide an investor with a chance to tap into European companies with a history of stable dividend growth, this kind of exchange-traded fund may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Successful Investing, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.