Europe's highest dividend yield companies

Europe’s highest dividend yield companies

26 May 2011

Here is my yearly list of the highest dividend yield companies in Europe and the UK.

Each year in May, with the bulk of the previous year’s financial reporting behind us, I compile a list of Europe’s highest dividend yield stocks to identify attractive market sectors and possible high yield investments.

Make sure you read to the end of the article where you can find my other European high dividend articles that may be of interest.

Dogs of the Dow

I have also selected my top 10 high dividend picks form the list based on the ?Dogs of the Dow? investment strategy popularised by Michael O?Higgins in his book Beating the Dow.

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

The average dividend yield of my 10 top dividend yield companies is 7,4%, higher than the 6,9% last year.

Not a bad return if you consider the near non existing interest rates available on bank deposits and high quality bonds in Euro’s (1,4% on one year German government bonds for example).

What is also surprising is that the share prices are not much above their 52 week lows. On average my top 10 picks are trading at just over 15,4% (15% in 2010) above their 52 week lows. This means these high dividend yield companies have not participated in the market recovery at all.

This year the list of industries is more mixed than last year. However telecommunications make up by far the largest industry sector in the top 20 with seven companies listed.

Past performance

Let’s take a quick look at the performance of the strategy over the last 2 years.

Year	My top 10 return	Top 20 return	Stoxx 600 return	My top 10 v Index	Top 20 v Index
2009	15,00%	18,40%	15,60%	-0,60%	2,80%
2010	8,90%	10,20%	10,30%	-1,40%	-0,10%

Source: Bloomberg(Returns exclude dealing costs and taxes)

Looking at the above table all I can say is don?t pay any attention to the companies I chose. You would have had higher returns by just buying the top 20.

Also the strategy did not do much better than the European Stoxx 600 index. But two years is too short a time period to be able to say if the strategy works.

The current list

Here is the list of the highest dividend yield UK and European companies:

My Pics	Name	Price	Industry	Dividend yield %	Debt / Equity %	Market Value (? Millions)	Dividend Payout Ratio %	% from 52-week low
	MARINE HARVEST	5,31	Fisheries	18,8	44,3	2.441	93	31
	CABLE & WIRELESS COMMUNICATI	48,29	Telecom Services	10,5	298,8	1.406	208	10
	MAN GROUP PLC	249,1	Invest Mgmnt/Advis Serv	9,3	37,3	5.142	169	23
	OPAP SA	13,46	Gambling (Non-Hotel)	9,0	0,2	4.070	85	35
1	FRANCE TELECOM SA	15,745	Telephone-Integrated	8,9	132,9	41.693	97	12
	CABLE & WIRELESS WORLDWIDE	51,95	Telecom Services	8,7	17,9	1.602	7874	13
	MEDIASET SPA	4,132	Television	8,5	67,7	4.406	113	1
2	RWE AG	41,935	Electric-Integrated	8,3	121,3	22.816	56	1
3	SANOMA OYJ	13,82	Multimedia	8,0	68,7	2.235	60	6
	SEADRILL LTD	190,8	Oil&Gas Drilling	7,9	169,6	11.521	0	65
	KONINKLIJKE KPN NV	10,34	Telephone-Integrated	7,7	358,2	15.474	70	5
	PAGESJAUNES GROUPE	7,502	Publishing-Periodicals	7,7	N/A	2.036	67	18
4	E.ON AG	20,375	Electric-Integrated	7,4	78,0	39.260	43	1
5	TELEFONICA SA	16,755	Telephone-Integrated	7,3	249,9	75.899	63	13
6	VIVENDI	19,185	Telecom Services	7,3	49,9	23.478	77	19
7	DRAX GROUP PLC	449,5	Diversified Operations	7,1	13,3	1.885	62	40
8	HOME RETAIL GROUP	210,8	Retail-Major Dept Store	7,0	0,0	1.931	63	12
	NOKIA OYJ	5,925	Wireless Equipment	6,8	36,7	21.796	81	9
	ORION OYJ-CLASS B	17,89	Medical-Drugs	6,7	23,5	2.531	91	33
9	CATLIN GROUP LTD	401,5	Property/Casualty Ins	6,6	3,7	1.694	43	26
10	DEUTSCHE TELEKOM AG-REG	10,61	Telephone-Integrated	6,6	133,0	44.769	178	23

Source: Bloomberg

Disclosure

I have a position in Vivendi.

Table description

My Pics – My top picks for a UK and European high dividend yield portfolio.

Name – Name of the company

Price – Share price on home exchange and currency as at 24 May 2011

Industry – Industry the company operates in

Dividend Yield – Yield calculated using the most recently announced net dividend divided by the current market price

Debt / Equity – Total debt to total shareholders equity.

Market capitalisation – Market value of the company in millions of Euro’s

Dividend payout ratio – Cash dividend / Net income before extraordinary income after minority interests and preference dividends expressed as a percent. This ratio indicates how sustainable the dividend is. A payout ratio of 100 or higher is most likely not sustainable.

% from 52-week low – This indicates the current share price movement from the 52-week low price. A number of 10% shows that the price is currently 10% above the 52-week low price.

Where does the list come from?

I compiled a list of companies from the following indices:

The 50 highest market capitalisation companies in the United Kingdom FTSE 100 and European Euro Stoxx 600
German DAX 30 index companies
European Euro Stoxx 50 index companies
European Stoxx 50 index companies

From the combined list I eliminated duplicate names and sorted the companies from highest to lowest on historical dividend yield.

From this list I selected the companies with the highest dividend yields.

Please remember a list like this is just a start to identify attractive investments. Each company on the list should be further analysed using your normal research process.

Europe’s highest dividend yield companies