Dear Fellow Investor

13 May 2010

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

Previous articles can be found here:

Dogs of Europe – May 2009

Dogs of Europe 2009 – Update

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 proposes that an investor annually 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 my top 10 European high dividend yield portfolio is 6.9%. Not bad when compared to the low interest rated available on bank deposits and high quality bonds.

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

Similar to last year utilities, telecommunication and integrated oil companies make up the largest part of the highest dividend payers.
Here are the UK and European highest dividend yield companies:

My PicsNamePriceIndustryDividend yieldDebt / Equity %Market Capitalisation (Millions)Dividend Payout Ratio %% from 52-week low
1DEUTSCHE TELEKOM AG-REG8.80Telephone-Integrated8.914138,38095912
2FRANCE TELECOM SA16.15Telephone-Integrated8.715042,775768
SEADRILL LTD147.70Oil&Gas Drilling6.917758,9521794
BP PLC549.20Oil Comp-Integrated6.734103,1706320
ENEL SPA3.83Electric-Integrated6.521335,9914221
SCOTTISH & SOUTHERN ENERGY1077Electric-Integrated6.21819,9425414
ENI SPA16.47Oil Comp-Integrated6.15465,9688310
4ROYAL DUTCH SHELL PLC-B 1816Oil Comp-Integrated6.026115,9518426
NATIONAL GRID PLC608Electric-Transmission6.065615,0549415
5E.ON AG25.32Electric-Integrated6.09450,6653313
6RWE AG59.58Electric-Integrated5.915833,4745415
7GDF SUEZ25.87Electric-Integrated5.87258,4877410
8TOTAL SA40.23Oil Comp-Integrated5.75194,4776313
9VODAFONE GROUP PLC139Cellular Telecom5.74973,17113325
10TELEFONICA SA17.20Telephone-Integrated5.426178,5016719
MUENCHENER RUECKVER AG106.00Reinsurance5.42720,9254317
BANCO SANTANDER SA9.50Commer Banks Non-US5.151178,1744643
GLAXOSMITHKLINE PLC1187.5Medical-Drugs5.115661,6615618
DEUTSCHE POST AG-REG11.93Transport-Services5.09114,42434238
ASTRAZENECA PLC2850Medical-Drugs5.04541,1954017
ALLIANZ SE-REG83.03Multi-line Insurance4.99637,6874036
TELECOM ITALIA SPA1.03Telephone-Integrated4.816918,8064414
BRITISH AMERICAN TOBACCO2069Tobacco4.814641,3037326
BAE SYSTEMS PLC339.6Aerospace/Defense4.77111,795NA15


I have a position in Deutsche Telekom, Vivendi and Vodafone all companies I have recommended to my subscribers

Table description

My Selection – 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 10 May 2010

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 its home currency in millions

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.




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 25 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.

Happy dividend hunting

Tim du Toit