10 More European High Dividend Yielders You Should Consider Now

September 19, 2017

10 More European High Dividend Yielders You Should Consider Now

  • There are interesting recession-proof companies on this list, all yielding 5% or more.
  • Some companies are cash cows, but don’t forget that tobacco companies have been the best investment in the past 30 years.
  • I’ll finish this list with a systemic risk analysis and a surprise stock with huge growth potential that offers a nice yield of 3%.


I hope you enjoyed the first part of my two-part series of European stocks with dividends that yield 5% or more.

Today, I’ll present you with another 10 interesting dividend plays, and I’m sure you’ll find interesting picks that fit your portfolio risk reward appetite.

Read to the end of this article as I’ll discuss a bit of the systemic risks that can affect the companies I’ve discussed in this series.

Let’s start with the list.

The Next !0 European 5%-Plus Dividend Yielders

Figure 1: Part 1 of 20 European stocks with dividend yields of above 5%. Source: Author’s data.

Klepierre – 5.35%

Klepierre (OTCPK: KLPEF) is another shopping center stock that’s well diversified across Europe.

Figure 2: Some of Kelpierre’s shopping centers. Source: Klepierre.

The company has been focused on growth and debt repayment for the last 10 years, and has managed to lower its debt to assets percentage from 83% in 2012 to 60% today. The free cash flows and revenues are pretty stable and excluding a European crisis, the dividend should be sustainable.

However, given the similar yield, perhaps the less risky option is Atrium European Real Estate ATRS, which was discussed in yesterday’s article, because Eastern Europe has a better trend in regard to shopping centers than does Western Europe.

Figure 3: Sales growth in Eastern Europe outpaces Western Europe. Source: Klepierre.

Nevertheless, Kelpierre is an interesting real estate play as it has great locations and very strong brands as tenants.

Munich Re – 4.87%

Munich Re (OTCPK: MURGY) is a world market leader in the reinsurance industry, and is a very boring stock. But if you like dividends, you also love boring stocks.

Its price to earnings (P/E) is 11.2 and the dividend yield is 4.87%. What’s unique about Munich Re is that its revenues have been very stable over the last decade. The company has never had a loss and earnings are extremely stable for an insurer.

Figure 4: Revenue, earnings are stable, dividend is growing, and book value has grown as well. Source: Morningstar.

In addition to the high dividend, the company has bought back 27% of outstanding shares in the last 10 years.

Just as an additional note, never trust data providers and their data. Always check the data twice and always check the company’s investor relations page. Munich Re has been paying a growing dividend every year, but the data on Morningstar only goes back to 2013 for the dividend.

Figure 5: Munich Re’s growing dividend. Source: Munich Re.

Munich lowered its 2017 profit guidance, but that’s something normal for a reinsurer. Be sure to look at the long term trend.

Marine Harvest – 8.5%

Marine Harvest SA (XETRA: PND, OTCPK: MHGVY) is the largest producer of Atlantic salmon. It has benefited from increased global salmon consumption and will probably benefit more as the world develops and people eat more salmon.

Figure 6: Global salmon consumption keeps increasing. Source: Marine Harvest.

Further growth will probably increase the dividend and the stock price. However, be aware that the fishing industry can be very volatile as fish prices are volatile. Disease, currency fluctuations, and other various risks could impact the dividend. Nevertheless, those who want exposure to a food commodity producer with a dividend should really dig into Marine Harvest.

ProSiebenSat – 6.8%

The high dividend yield from ProSiebenSat (OTCPK: PBSFY), a German TV operator, is thanks to three negative TV ad warnings from the company that brought the stock price to 4 year lows. What’s plaguing the company is uncertainty surrounding TV ads in Germany, and globally as many have lowered their marketing budgets.

Before investing, be sure to analyze what could happen to the TV industry as there are many who speculate that the TV is the next radio. However, it’ll take some time before ProSieben feels increased pressure for a lower dividend and the company isn’t staying still as it is growing its digital and content production significantly.

Figure 7: ProSiebenSat’s revenue segmentation and growth. Source: ProSiebenSat.

Royal Dutch Shell – 6.55%

The main question surrounding the European oil giant Royal Dutch Shell (NYSE: RDS.A, RDS.B) is the sustainability of the dividend. However, operating cash flow has significantly increased in the last quarters and the dividend can finally be paid out of free cash flow, which hasn’t been the case in the last few years.

Shell has more than doubled long term debt in the last 5 years and revenues have almost halved since 2012 which is logical given the decline in oil prices. The dividend costs the company $10 billion per year and there shouldn’t be a problem paying it in the coming years as long as oil prices remain around $45, which has been the average oil price for the last 4 quarters, and Shell has generated sufficient cash flows to cover all expenses, CAPEX, and dividends.

The risk related to Shell mostly now lies in the electric vehicle threat and how fast EVs will disrupt the oil industry. Given the speed of technology disruption we have seen in other industries, I wouldn’t be surprised to see a quick revolution even if we don’t see it now.

Total SA – 4.9%

Total isn’t in as a good of a situation as Shell, which makes it a bit riskier given that the free cash flow doesn’t cover the dividend.

Before investing in an oil company, be sure to know what could happen at various oil prices and assess the risk of a dividend cut. A dividend cut and low oil prices would have an extreme impact on oil stocks as was the case in January 2016.

Figure 8: Shell (blue) and Total (green) both declined significantly and sharply at the end of 2015. Source: Yahoo Finance.

RTL Group – 7.97%

RTL Group is a European television, digital, and radio broadcasting powerhouse that has been nothing but stable in the last 10 years. However, amidst the uncertainty surrounding TV advertising, the stock has been declining since 2014.

Figure 9: RTL’s stock price. Source: Google.

RTL, like ProSieben, is a cash cow where the owners try to milk every cent. For now, it has a negative effect on the stock price but if you believe TV won’t go away that quickly, there could be very positive returns in this sector. It reminds me of the tobacco industry, many forget that Phillip Morris and the Altria Group have been among the best performing stocks to own in the last few decades, despite the declining environment. RTL’s 7% dividend, which isn’t in danger, could easily make the stock a long-time winner. If not, the high dividend will certainly limit the losses.

Wereldhave NV – 7.58%

Wereldhave is a Dutch real estate company that invests in shopping centers, but in much smaller cities than the two similar companies I’ve discussed in this series of articles.

Most of the company’s portfolio is in the Netherlands, followed by Belgium, and with a few centers in France and Finland. The top tenants are well established Dutch supermarkets and other retailers which mitigates the risks. Thus, Wereldhave is a bet on the Dutch economy, and on much less fancy shopping centers as the centers are mostly in smaller towns but in highly populated areas.

The company has been paying consistently a dividend in the last 10 years, despite two recessions in Europe. The price to book value is 0.8.

This is a very interesting Dutch real estate play, and guidance is for higher earnings and dividends in 2018.

Sky Network – 10.5%

Sky is another TV company that hasn’t enjoyed a stellar stock performance lately. However, its fundamentals look pretty stable.

The big negative with Sky Network comes from declining TV ads and future uncertainty about where the business will go.

Figure 10: Declining TV ad revenue is the issue. Source: SKY Network.

A proper cash flow calculation is necessary to determine the value of these cheap TV operators as some of them could be undervalued due to the negative sentiment surrounding the environment.

Domino’s Pizza UK – 3%

I’ve replaced the Italian insurer Unipol with a much more interesting stock to finish this dividend stock list. The dividend is a bit lower, but the growth potential should cover for that as higher dividends can be expected in the future.

Domino’s Pizza UK is listed on the London stock exchange under the ticker DOM or on the OTC market with the ticker DPUKY, and operates franchises in the UK, Ireland, Switzerland, and Luxembourg.

The UK franchise is cheap in relation to its growth with a P/E ratio of 19. The dividend of 3.1% is also high for a growth stock and the dividend cover is good at 1.9.

Figure 11: DOM is growing on all metrics. Source: Domino’s UK.

The company is constantly opening new stores. It isn’t afraid of cannibalization as same area new stores significantly increase revenue while the existing stores still manage to grow. Like for like sales are still positive at 2.4% despite the significant number of new stores. This shows that the neighborhood business model really works.

Figure 12: Domino’s store expansion strategy is working. Source: Domino’s UK.

There will definitely be competition, but owning a company now that has the ambition to become a global household name and has a strategy that works and will probably continue to grow in the future, is a very compelling idea.

Figure 13: Domino’s vision. Source: Domino’s UK.

Conclusion & Risks

Every international investor is exposed to currency risks when investing abroad. Nevertheless, these can also be positive risks.

Keeping an eye on the companies discussed in this two-part series can definitely increase your returns as such yields are difficult to find in the U.S.

Many of the stocks mentioned in this series offer protection against future possible inflation in the Euro zone or aren’t even related to what is going on in Europe. Therefore, it’s important to assess what best fits your portfolio and risk reward appetite.

I hope I have given you a nice bunch of stocks to dig into, and I’m sure some will fit your portfolio.