5 Big European Dividend Stocks Any Investor Can Buy

March 4, 2022

The Russian invasion of Ukraine last month came at a time when investors were already worried about expensive market valuations, the highest inflation in decades, and hawkish central banks.

As investors continue to swing between fear and opportunities, I expect to see volatility in the stock market to continue over the next few months.

One of the best strategies to navigate through periods of market turbulence is to turn to dividend-paying stocks, as investors can view their tangible payouts as a margin of safety.

Dividend plays also help investors to focus on the long term as the goal is not to outperform the broader market but to generate a long-term passive income that can grow.

So, here are five European dividend stocks that can help you to sit back and wait for the valuation to revert to historical norms, while also continuing to enjoy sustainable passive income streams.

1) Unilever

Market Capitalisation GBP 93.39 billion
Share Price 3,646.50p
Dividend Yield 4.0%
Industry Consumer Staples

Source: Bloomberg, ProsperUs

Consumer products giant Unilever PLC (LSE: ULVR) sells food, beauty care and personal care products.

Among some of the household names include Dove soap, Lipton tea, Hellman’s mayo, Rexona and others.

The company is dominant in many of its product line-ups with around 80% of its brands being ranked within the top two in their respective markets.

The top 13 brands under Unilever generated GBP 27 billion in revenue for the financial year 2021 (FY2021).

Top 13 brands under UnileverSource: Unilever Earnings Presentation (February 2022)

The underlying sales growth was the fastest in nine years at 4.5% in FY2021, with 1.6% coming from sales volume.

Due to the dramatic rise of input costs in 2021, the company has increased prices. For FY2021, price growth was at 2.9%.

Despite the challenging operating environment, the company recorded a 3.4% revenue increase to GBP 52.4 billion while net profit jumped by 9.0% to GBP 6.6 billion.

In 2021, the company completed GBP 3 billion worth of share buybacks and announced a further GBP 3 billion share buyback programme for the 2022-2023 period.

Unilever has a strong dividend track record of more than 20 years of stable and rising dividend payouts.

In FY2021, the company’s dividend grew 3.0% and its dividend yield stood at 4.0% based on its current share price of 3,646.50p (or GBP 364.65).

2) Sage Group

Market Capitalisation GBP 7.25 billion
Share Price 712p
Dividend Yield 2.5%
Industry Technology

Source: Bloomberg, ProsperUs

The Sage Group PLC (LSE: SGE) is a leading software company that offers IT solutions to small and medium-sized business.

The UK-based company focuses on cloud-based software tools for accounting, financial management, enterprise planning, human resource, payroll and payment processing.

In the first quarter of its financial year 2022 (Q1 FY2022), the recurring revenue for Sage Group grew by 8% to GBP 429 million, underpinned by a 21% increase in Sage Business Cloud revenue to GBP 280 million.

It is exciting to see continued strength in new customer acquisition as its software subscription revenue increased by 13% to GBP 336 million.

I think that Sage Group is in a good position to tap into the surge in spending on cloud-based software over the next five years, especially among small businesses.

In FY2021, Sage’s dividend increased 2.5% and it is worth noting that dividends have increased every year since 2005.

At its current share price of 712p (or GBP 7.12), it has a dividend yield of 2.5%.

3) BAE Systems

Market Capitalisation GBP 22.76 billion
Share Price 724p
Dividend Yield 3.5%
Industry Aerospace & Defense

Source: Bloomberg, ProsperUs

BAE Systems PLC (LSE: BA) is Britain’s largest defense contractor and a major supplier of weapons to the US military.

I believe that with rising geopolitical tensions, we will see an increase in spending on defense.

For example, we saw a historical break with Germany’s post-war pledge to not export weapons to conflict zones and a major shift in its defense policy to ramp up military spending.

Aside from that, BAE Systems has increased its dividend every year since 1999 with the exception of 2019. In 2021, the company’s dividend grew by 6% year-on-year.

At its current share price of 717p (or GBP 7.17), it offers an attractive dividend yield of 3.5%.

4) Novo Nordisk

Market Capitalisation DKK 1.61 trillion
Share Price DKK 695.2
Dividend Yield 1.5%
Industry Healthcare

Source: Bloomberg, ProsperUs

Denmark’s Novo Nordisk A/S (OMX: NOVOB) develops, produces and markets pharmaceutical products. It specialises in diabetes care and obesity.

The company also supplies about 50% of the world’s insulin from manufacturing facilities in Brazil, China, Denmark, France and the US.

The nature of its business model, such as the insulin sales, helps to sustain robust recurring cash flows that support Novo Nordisk’s strong Research & Development (R&D) investment and rising dividend payouts.

The company has a strong track record in its dividend payout as well as growth. Itsividend per share (DPS) has been on the rise over the last 26 consecutive years and increased by 14.3% in FY2021.

The dividend safety is also great as the company’s dividend payout ratio is at around the 50% level.

5) Swiss Re AG

Market Capitalisation CHF 25.8 billion
Share Price CHF 81.12
Dividend Yield 7.3%
Industry Insurance

Source: Bloomberg, ProsperUs

Swiss Re AG (SREN: SW) is one of the world’s leading wholesalers of reinsurance and insurance.

Although the COVID-19 pandemic caused Swiss Re to fall into losses in 2020, the company managed to turn itself around last year.

Despite remaining major COVID-19 impacts and a high occurrence of large natural catastrophe events throughout the year, Swiss Re’s net profit rebounded to US$1.4 billion from a US$0.9 billion loss.

As we move towards the post-COVID era, I believe that Swiss Re will be a beneficiary of the return to normalcy.

I also like Swiss Re for its stable dividend payout to shareholders. The company has paid annual dividends to its shareholders since 1994.

For FY2021, the Group has maintained a DPS of CHF 5.90, which translates into a dividend yield of 7.3%.

Long-term passive income

The global stock market’s volatility will continue in the near term and it is inevitable that long-term investors will encounter stock market corrections, or even a bear market.

While investors want to ride on the bull market, stock market corrections offer opportunities for investors to buy great stocks at a lower cost.

By adopting a dividend-play strategy, it allows you to take a step back and invest in the long term potential of companies while also generating a passive income.

Disclaimer: ProsperUs Investment Coach Billy Toh doesn’t own shares of any companies mentioned.

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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