- The Euro Dividend Aristocrats Index is created by S&P and is based on a managed dividends policy of increasing or stable dividends for at least 10 consecutive years.
- 40 European stocks are a member of this list.
- In Europe, it is not common to focus on paying a dividend in a row ( consecutive years) to the shareholders.
- End of June, S&P introduced some new rules, which resulted in several changes to the list.
S&P Index company applies the following criteria to construct the US Dividend Aristocrats list:
- must be members of the S&P 500
- must have increased dividends every year for at least 25 consecutive years
- Market Cap at least USD 3 billion
- Liquidity at least USD 5 million (average daily value traded)
- Diversification, at least 40 constituents and not sector allocation above 30%
The European Dividend Aristocrats are based (by S&P) on the 40 highest dividend-yielding Eurozone companies within the S&P Europe Broad Market Index (BMI) and a managed dividends policy of increasing or stable dividends for at least 10 consecutive years.
Next to the currencies (EUR vs USD), the two major differences are:
- Increasing or stable dividends for at least 10 consecutive years vs 25 consecutive years (US)
- 40 highest dividend-yielding (EU), in the US the height of the yield is not a selection factor.
The Dividend European Aristocrats Excel spreadsheet contains the following fundamental and stock price performance metric for each stock in the index.
- Dividend & earnings per share
- Dividend Yield
- Pay-out ratio
In June 2021, S&P has announced an update to the Monthly Dividend Review (“MDR”) for the UK and high-yield euro dividend aristocrats.
A relevant change is to focus more on the quality of dividend. The Constituent Selection Rule is now:
“Stocks must have increased or maintained stable dividends for at least 10 consecutive years. Stocks cannot have an indicated yield of more than 10% as of the index rebalancing reference date. In addition, new index constituents must have a maximum 100% dividend payout ratio, and existing index constituents must have a non-negative dividend payout ratio”
New Euro Dividend aristocrats added to the index in July are:
- Elisa Oyj
- Kone Oyj
- Fresenius Medical Care
- Fresenius SE
- Weinerberger AG
- CANCOM SE
- Elia Group
In 2021 the Euro Dividend Aristocrats index performance is at the moment of writing up 11.31% year-to-date and almost back to the levels of early 2020. The annualized total return over 10 years is 6.93%. The indicated dividend yield is around 3.2% and the average projected PE is 15.66 for the stocks in this index.
Other Sources of Dividend Investment Ideas
There are several lists to quickly screen for businesses that regularly pay rising dividends.
- The Dividend Aristocrats Index is based on 64 companies part of the S&P 500 and with 25+ years of consecutive dividend increases.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of less than 20 businesses with 50+ years of consecutive dividend increases.
- The MoneyInvestExpert Defensive Aristocrats is a performance-based top-10 selection of the Dividend Aristocrats to outperform the market in the long-term.
- Portfolio lists like the Berkshire Hathaway Portfolio or Bill Gates’stock portfolio can be a source.
- For the European focused investors, there is also the list of European Dividend Aristocrats.
- Dividend Champions are not necessarily members of the S&P 500 index, have increased their dividend for 25 or more consecutive years.
- 100+ years of dividend, the list of stocks that pay over 100 years of dividend can be a list of inspiration.
- Blue Chips stocks from the US or the European ones.
Next to selecting the right dividend stocks, important principles for successful long-term investing are Disciple, Diversification, Defensive & indeed Dividend. Read more about this in our free e-book.
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