In May this year I wrote an article Dogs of Europe 2009 (also called dogs of the STOXX) on the highest dividend paying stocks in Europe.

Due to popular demand I am updating the list.

To recap.

I put together a Dogs of European or Dogs of the STOXX portfolio based on the American investment strategy called ?Dogs of the Dow? popularised by Michael O?Higgins in his book Beating the Dow.

The strategy proposes that an investor annually select the ten Dow Jones Industrial Index stocks with the highest dividend yields. All shares are sold after one year and then reinvested in the then ten highest dividend yield shares.

The strategy has marginally outperformed the Dow Jones Industrial Index over the last nine years according to the Dogs of The Dow website a site dedicated to the strategy.


From 22 May 2009 to 2 Nov 2009 my Dogs of the STOXX portfolio returned 11% including dividends. Slightly less than the European STOXX 600 index return of 14.8%

The table below shows the 40 highest dividend yield shares in Europe and the UK in descending dividend yield order.

Similar to May 2009 telecom, utility and oil companies are well represented.

The numbers from one to ten in the ?May Dog? column shows my May 2009 Dogs of the STOXX portfolio suggestions for the year. I have avoided companies that have:

  • Announced dividend cuts such as BT Group and Marks & Spencer
  • Announced substantial earning declines such as ThyssenKrupp
  • Have high payout levels which indicate that the historical dividend may be unsustainable

The only change I would suggest is that BASF be exchanged against BP PLC as management has said that BASF may not earn its cost of capital this year and the dividend may thus be at risk.


May DogNamePriceIndustryDividend yieldDebt / Equity %Market Capitalisation (Millions)Dividend Payout Ratio %% from 52 week low
1ENEL SPA4.06Electric-Integrated9.6305.138,1316043
3DEUTSCHE TELEKOM AG-REG9.29Telephone-Integrated8.4116.540,51722819
AVIVA PLC383.60Life/Health Insurance7.5131.310,507NA140
2FRANCE TELECOM SA16.86Telephone-Integrated8.3145.044,655909
5RWE AG59.70Electric-Integrated7.5116.433,2267629
4ENI SPA16.91Oil Comp-Integrated6.846.967,7315343
SCOTTISH & SOUTHERN ENERGY1,079.00Electric-Integrated6.1181.39,9595415
BP PLC572.30Oil Comp-Integrated5.936.4107,3474943
NATIONAL GRID PLC606.50Electric-Transmission5.9674.914,9219419
9VODAFONE GROUP PLC134.55Cellular Telecom5.848.170,77213328
ROYAL DUTCH SHELL PLC-B SHS1,760.00Oil Comp-Integrated6.118.3111,5162734
ROYAL DUTCH SHELL PLC-A SHS20.21Oil Comp-Integrated6.018.3124,3142732
REPSOL YPF SA18.17Oil Comp-Integrated4.741.122,1774762
BANCO SANTANDER SA11.00Commer Banks Non-US4.7751.089,67454180
MARKS & SPENCER GROUP PLC342.50Retail-Major Dept Store5.2147.05,4095476
10E.ON AG26.09Electric-Integrated5.8119.152,20620547
TOTAL SA40.64Oil Comp-Integrated5.649.195,3715119
CENTRICA PLC248.30Gas-Distribution5.082.012,737NA22
BT GROUP PLC131.30Telephone-Integrated5.09,793.710,178NA87
7BASF SE36.50Chemicals-Diversified5.482.633,5246282
BAE SYSTEMS PLC314.50Aerospace/Defense4.838.411,133127
GLAXOSMITHKLINE PLC1,250.00Medical-Drugs4.8204.164,8596427
IBERDROLA SA6.18Electric-Integrated4.3133.732,4595742
TELEFONICA SA19.03Telephone-Integrated4.3308.789,5366141
BRITISH AMERICAN TOBACCO PLC1,943.00Tobacco4.6175.138,7906831
MUENCHENER RUECKVER AG-REG107.64Reinsurance5.133.121,2487136
SKANSKA AB-B SHS106.00Building-Heavy Construct5.016.644,4267099
GDF SUEZ28.51Electric-Integrated4.968.764,4196329
REED ELSEVIER PLC462.20Publishing-Books4.40.05,6049114
8SCHNEIDER ELECTRIC SA71.01Power Conv/Supply Equip4.957.018,6005173
NOKIA OYJ8.63Wireless Equipment4.631.332,319429
TELECOM ITALIA SPA1.08Telephone-Integrated4.6163.819,0144742
PEARSON PLC832.50Multimedia4.149.76,7497149
VINCI SA35.63Building-Heavy Construct4.5250.518,5195145
ALLIANZ SE-REG78.04Multi-line Insurance4.5110.935,3564073
SAINSBURY (J) PLC329.90Food-Retail4.053.36,0998025
HSBC HOLDINGS PLC673.70Diversified Banking Inst3.9362.4117,258135149
ORKLA ASA53.20Food-Misc/Diversified4.270.254,739NA62

Source: Bloomberg 2 November 2009 See Column description and methodology at the end of this article



Of the suggested dog shares I have a position in Vivendi.


The companies on the list are all large in mundane industries, but the yields are really attractive.

More than 8% in the current environment where I am earning less than 0.5% for a one month fixed deposit is worth a second look.

I just saw that Deutsche Telekom posted good third quarter numbers making the share especially attractive as the dividend will at worse be maintained.

On Saturday the 24th of October Germany set the clocks back to winter time. The following week at work winter really made its presence clear when I had to switch on the lights in the office at around 16:00. Its going to get darker a lot earlier as the solstice on December 21 is still some time away.

That is why I am looking forward to our trip to South Africa starting the last week in November. I will have limited internet access the first week while staying with my father in Greyton near Cape Town. But after December 2nd everything should be back to normal.

Please excuse if my email replies take a bit longer during during that time. Around December 20th I will be back in Hamburg.


PS If you want to implement a Dogs of Europe investment strategy in your portfolio take a look at the Quant Investing Stock screener