Look abroad for income.
When many investors look for income, they focus on the U.S. stocks they know. Unfortunately, Wall Street doesn’t award extra credit for past successes or big name recognition, as investors have seen with the fall of former dividend favorite General Electric Co. (ticker: GE). If you’re looking for income, then, why limit the search to the same old corporations? And in the age of globalization, why stick with only domestic corporations? There are a host of generous dividend payers in Europe that offer the potential for income and stability that may be superior to old favorites. Here are nine such European income investments that an income investor should consider.
Lloyds Banking Group (LYG)
While some British banks have taken a spill thanks to Brexit, Lloyds has stabilized. There has been progress on efforts to mitigate the adverse effects of the U.K. leaving the European Union that could hurt the financial sector in London, and similarly many investors seem to feel that most of the negativity has already been priced in. And besides, this is a $50 billion bank that has more than 250 years of operating history and is one of the most iconic bank stocks in Europe. Between its pedigree and its generous yield at present, long-term investors could be well-served by taking a stake in LYG right now.
Current yield: 5.8 percent
Coca-Cola European Partners (CCEP)
Sure, soft drink giant Coca-Cola Co. (KO) is an American megacorporation. However, Coca-Cola European Partners is Coke’s independent European bottler and distributor — and since it is structured as a partnership, it has a mandate for generous dividends as it operates as a middleman between its parent KO and customers and wholesalers. Furthermore, while its corporate parent has faced pressure lately from changing consumer tastes, CCEP is basically a pass-through entity for existing demand and insulated from growth challenges. As a result, it has outperformed its parent KO significantly in the last several months on top of offering a nice dividend history.
Current yield: 2.7 percent
Anheuser Busch InBev (BUD)
A bottler of a different flavor, this European stock is the world’s largest brewer in the world. It was formed after a Belgian beer powerhouse bought the St. Louis-based manufacturer Budweiser in 2009 and then snapped up SAB Miller in 2016. BUD stock isn’t without risk, despite its scale. The rise of microbrews as well as a growing focus on liquor and wine has put pressure on the legacy beer brands under BUD’s umbrella. However, with a vast portfolio of brands including Budweiser, Corona and Shocktop, plus lesser-known regional and craft lines, it looks as though this dividend payer is settled in for the long term.
Current yield: 4.5 percent
BP (BP)
British integrated oil and gas giant BP disappointed investors in the last decade. First, there was the 2010 Deepwater Horizon oil spill in the Gulf of Mexico that resulting in a staggering $65 billion in total damages over several years of lawsuits. Then, the crude oil price collapse of 2016 punished the stock even further. However, BP has rallied. It seems more fairly priced than other stocks in the energy sector and Wall Street negativity has been largely priced in. As a vote of confidence for its income potential, BP raised its dividend in 2018 — the first hike since 2014 and a sign BP has more to offer income investors.
Current yield: 6.1 percent
GlaxoSmithKline (GSK)
Global pharmaceutical giant GSK was already a powerhouse in 2018, and its reach has increased even more lately thanks to a big December deal with U.S. rival Pfizer (PFE) that will combine their consumer health care businesses into a single entity. The deal will have GlaxoSmithKline owning a 68 percent majority of the new joint venture. Optimism over this partnership has fueled strong share-price performance lately, but more importantly speaks to the long-term potential of GSK to find reliable revenue streams to offset the volatile business of researching branded pharmaceuticals and fending off patent expirations. That ensures it will continue its robust history of dividend payments.
Current yield: 5 percent
Unilever (UL)
As evidence of how income investors may benefit from diversifying way from U.S. based corporations, Unilever has outperformed a number of peers in America including Kraft Heinz Co. (KHC) and Campbell Soup Co. (CPB) that have struggled in the last several months. That’s a particularly attractive characteristic right now for investors looking to the sector for risk-off plays that will hang tough in a challenging market environment. And for a long-term strategy of generating income, UL has a nice dividend yield and a long history of consistent payouts since 1987. With big brands like Dove soap and Lipton teas, there’s a lot for investors to like.
Current yield: 3.4 percent
LyondellBasell Industries (LYB)
U.K. chemicals manufacturer LyondellBasell is a mid-sized industrial player that many U.S. investors may not recognize. The firm is best-known for its polyethylene and polypropylene technologies — plastics that are used in all manner of packaging and bottles for a host of other industries. This makes LYB a pretty safe bet in any economic environment, given that it boasts strong baseline demand across a diverse customer base. The company may not have the same scale or brand power as chemicals giant DowDuPont (DWDP), but it is a very stable and reliable play — exactly the kind of income stock long-term investors should look for at home or abroad.
Current yield: 4.7 percent
Diageo (DEO)
Leading liquor company Diageo is behind major brands that include Smirnoff vodka, Captain Morgan rum and Johnnie Walker whisky. Its product portfolio includes seven of the top 20 premium spirits brands worldwide, and its name recognition helped the company into the growing spirits marketplace of Asia with big success. DEO stock is not just stable because of this big footprint and powerful brands, however. As a sin stock that peddles a substance that typically does well in any environment — particularly in an economic downturn where a stiff drink is seen as a necessity in many households — investors can be confident this trade will pay off in the long run.
Current yield: 3 percent
Novo Nordisk (NVO)
The health care sector generally is a dependable place to turn for income, and Novo Nordisk is perhaps even more reliable than other stocks in the space thanks to its focus on diabetes-related medications. The sad reality is that, according to the World Health Organization, worldwide cases of diabetes quadrupled from 108 million in 1980 to 422 million in 2014. As recently as 2016, the corporation held nearly half of the market share in the total insulin market. The constant maintenance required by diabetes means a constant flow of cash to Novo Nordisk — which, in turn, fuels a reliable income stream for investor dividends.
Current yield: 2.7 percent
Great European dividend stocks to buy now
Here are nine great European dividend stocks for income investors:
— Lloyds Banking Group (LYG)
— Coca-Cola European Partners (CCEP)
— Anheuser Busch InBev (BUD)
— BP (BP)
— GlaxoSmithKline (GSK)
— Unilever (UL)
— LyondellBasell Industries (LYB)
— Diageo (DEO)
— Novo Nordisk (NVO)
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9 Great European Dividend Stocks to Buy Now originally appeared on usnews.com
