11 Best European Dividend Stocks to Buy
In this article, we will take a detailed look at the 11 Best European Dividend Stocks to Buy. For a quick overview of such stocks, read our article 5 Best European Dividend Stocks to Buy.
European equities were laggards when compared to US stocks in 2023 as economic activity in the Eurozone continues to contract. In December, the Eurozone saw its economic activity shrink for the seventh straight month. However, analysts at Citigroup believe 2024 will bring a positive change as they expect European stocks to hit record high in the year. Citigroup analyst Beata Manthey recently said that bad news is already priced in for European stocks. The analyst expects the regional benchmark Stoxx 600 Index to end 2024 at 510 points. As of December 18 the index was at 476 points. Citigroup’s analyst said the market has become too pessimistic when it comes to earnings growth expectations for European stocks. This development, she believes, has created a buffer zone to protect stocks from further declines should the European companies post disappointing earnings next year.
While we have analyzed US dividend stocks like Verizon Communications Inc. (NYSE:VZ), Altria Group, Inc. (NYSE:MO), and Pfizer Inc. (NYSE:PFE) consistently over the past few months, in this article we will be taking a look at some European dividend stocks hedge funds are piling into.
Methodology
For this article we first used a stock screener to identify companies headquartered in Europe with dividend yields of at least 2% as of December 15. From the resultant dataset we picked 11 companies with the highest number of hedge fund investors. Most of these companies are headquartered in Europe but have operations in the US and other parts of the world. The list is ranked in ascending order of the number of hedge fund investors. Hedge fund sentiment data was taken from Insider Monkey’s database of 910 hedge funds.
Photo by Viacheslav Bublyk on Unsplash
11. TE Connectivity Ltd (NYSE:TEL)
Number of Hedge Fund Investors: 46
Switzerland-based TE Connectivity Ltd (NYSE:TEL) make sensors and connectors for various industries. TE Connectivity Ltd (NYSE:TEL) has increased its dividend consistently since 2007. Earlier this month, TE Connectivity Ltd (NYSE:TEL) said its board approved an increase in its share repurchase program by an additional $1.5 billion. The company also approved a recommendation to increase its quarterly dividend from $0.59 to $0.65 per share for the four fiscal quarters starting in April 2024.
As of the end of the third quarter of 2023, 46 hedge funds had stakes in TE Connectivity Ltd (NYSE:TEL).
Carillon Eagle Mid Cap Growth Fund made the following comment about TE Connectivity Ltd. (NYSE:TEL) in its Q3 2023 investor letter:
“TE Connectivity Ltd. (NYSE:TEL) traded lower, along with other automotive suppliers, due to media speculation surrounding the United Auto Workers strike. Major U.S. original equipment manufacturers (OEMs) could temporarily shut down production if an agreement is not reached soon.”
10. Ferguson PLC (NYSE:FERG)
Number of Hedge Fund Investors: 46
Headquartered in the UK, plumbing and HVAC solutions company Ferguson PLC (NYSE:FERG) ranks 10th in our list of the best European dividend stocks to buy according to hedge funds. Earlier this month Ferguson PLC (NYSE:FERG) upped its quarterly dividend by 5.3%. Dividend yield came in at about 1.88%.
A total of 46 hedge funds tracked by Insider Monkey had stakes in Ferguson PLC (NYSE:FERG).
ClearBridge Mid Cap Growth Strategy made the following comment about Ferguson plc (NYSE:FERG) in its Q3 2023 investor letter:
“We initiated a new position in Ferguson plc (NYSE:FERG), in the industrials sector, a leading distributor of plumbing, pipes-values-fittings, appliances, janitorial supplies and other products to plumbing and mechanical contractors. The company is an established market leader, commanding nine percent of the market in a highly fragmented industry. Ferguson has the opportunity to grow faster than the industry average through scale and technology advantages as well as accretive acquisitions. With the company having divested its European operations to focus on the North American market, we believe it is poised for significant valuation improvement.”
9. CRH PLC (NYSE:CRH)
Number of Hedge Fund Investors: 48
With a dividend yield of over 6%, Ireland-based building materials company CRH PLC (NYSE:CRH) ranks 9th in our list of the best European dividend stocks to buy now.
As of the end of the third quarter of 2023, 48 hedge funds tracked by Insider Monkey had stakes in CRH PLC (NYSE:CRH).
CRH PLC’s (NYSE:CRH) management talked about dividends and other updates during Q3 earnings call:
We also continue to return significant amounts of cash to our shareholders through dividends and share buybacks. Our ongoing share buyback program is on track to return approximately $3 billion in 2023 and the current tranche of the program will be completed before the end of the year.
In advance of our intented transition to quarterly dividends in 2024 and consistent with our progressive dividend policy and strong financial position, this morning, we have announced an accelerated payment of our 2023 dividend, representing a 5% increase compared to the prior year. Looking ahead to the remainder of the year and based on current trading conditions at the momentum we see across our businesses, I’m pleased to report that we are raising our previous guidance and expect to deliver full year group EBITDA of approximately $6.3 billion well ahead of the prior year and representing another record year for CRH. Turning to Slide 2 and before taking you through the trading performance for each of our businesses, I’ll briefly outline our thoughts on the market backdrop and trading environment across our main markets of North America and Europe over the course of the year so far.
Despite the impact of higher interest rate environment, we continue to experience positive underlying demand across our key end use markets. In infrastructure, our largest …. [read the entire earnings call transcript]
Like CRH, Verizon Communications Inc. (NYSE:VZ), Altria Group, Inc. (NYSE:MO), and Pfizer Inc. (NYSE:PFE) are also popular stocks among smart money investors.
8. nVent Electric PLC (NYSE:NVT)
Number of Hedge Fund Investors: 48
UK-based electrical equipment company nVent Electric PLC (NYSE:NVT) earlier this month increased its dividend by 8.6%.
As of the end of the third quarter of 2023, 48 hedge funds tracked by Insider Monkey had stakes in nVent Electric PLC (NYSE:NVT). The most significant stakeholder of nVent Electric PLC (NYSE:NVT) was John W. Rogers’ Ariel Investments which owns an $113 million stake in nVent Electric PLC (NYSE:NVT).
During Q3 earnings call nVent Electric PLC’s (NYSE:NVT) management talked about dividends and guidance:
Year-to-date, we have returned $103 million to shareholders, including dividends and share repurchases. Moving to Slide 9, for our updated full-year outlook. We are updating our reported and organic sales forecast to reflect the mixed environment and expected channel inventory adjustment. Reported sales growth is now expected to be in the range of 12% to 13% versus our prior guidance of 13% to 15%. This reflects full-year organic growth of 3% to 4% versus our prior guidance of 4% to 6%.
We continue to expect acquisitions to contribute approximately 9 points to sales growth. We are raising our adjusted EPS guidance to a range of $3.01 to $3.03, up 25% to 26% versus our prior guidance of $2.85 to $2.91. This new guidance reflects our year-to-date performance, continued strong execution and better acquisition performance. We now expect acquisitions to contribute approximately $0.15 to adjusted EPS versus our previous expectation of $0.08 to $0.10. Looking at our fourth quarter outlook on Slide 10, we expect reported sales to grow 15% to 17% with acquisitions contributing approximately 13 points to sales. Organic sales are expected to be up 1% to 3%. We expect adjusted EPS to be between $0.73 and $0.75, which at the mid-point reflects 12% growth relative to last year.
Read the full earnings call transcript here.
Mairs & Power Growth Fund made the following comment about nVent Electric plc (NYSE:NVT) in its Q3 2023 investor letter:
“Stock selection remains a positive impact for the year and almost offset the performance headwind from sector allocation. Additionally, nVent Electric plc (NYSE:NVT), a Minnesota-based Industrials company, was a positive contributor and is connected to AI and technological advancements. nVent’s management team has done a remarkable job of reinvigorating the company’s organic growth. They also did a better job of navigating through the supply chain disruptions and input shortages than most. The company’s liquid cooling capabilities will likely be in high demand for the foreseeable future to prevent AI servers from overheating.”
7. Shell PLC (NYSE:SHEL)
Number of Hedge Fund Investors: 49
In June this year oil giant Shell upped its dividend by 15%. Shell PLC (NYSE:SHEL) said it would increase its shareholder distributions to 30% to 40% of cash flow from operations, up from 20% to 30% previously.
A total of 49 hedge funds in Insider Monkey’s database had stakes in Shell PLC (NYSE:SHEL) as of the end of September this year.
6. AstraZeneca plc (NASDAQ:AZN)
Number of Hedge Fund Investors: 49
UK-based AstraZeneca plc (NASDAQ:AZN) ranks 6th in our list of the best European dividend stocks to buy according to hedge funds. The stock is making moves after AstraZeneca plc (NASDAQ: AZN) said it would buy U.S. vaccine developer Icosavax (NASDAQ:ICVX) in a deal valued at up to $1.1 billion. The deal comes as AstraZeneca plc (NASDAQ: AZN) plans to strengthen its respiratory syncytial virus (RSV) vaccine portfolio.
Out of the 910 hedge funds in Insider Monkey’s proprietary database, 49 hedge funds had stakes in AstraZeneca plc (NASDAQ:AZN). The most significant stakeholder of AstraZeneca plc (NASDAQ:AZN) was Rajiv Jain’s GQG Partners which owns a $951 million stake in AstraZeneca plc (NASDAQ:AZN).
In addition to Verizon Communications Inc. (NYSE:VZ), Altria Group, Inc. (NYSE:MO), and Pfizer Inc. (NYSE:PFE), hedge funds also love AZN.
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Disclosure. None. 11 Best European Dividend Stocks to Buy was initially published on Insider Monkey.