In this article:
- What are Dividend Kings, Aristocrats, Champions, Challengers, and Contenders?
- Which criteria are used to construct the Indices on European Dividend Stocks?
- Is there a true European Dividend Aristocrat index and ETF, comparable to the US Dividend Aristocrats?
In our search for a true European Dividend Aristocrat index, we looked at the different indices on European Dividend stocks and related ETF / index tracker allowing investors easy access to follow and invest in the famous Dividend Aristocrats in Europe. We focus in this article on ETF’s listed in Europe. Here are our findings.
What are Dividend Kings, Aristocrats, Champions, Challengers, and Contenders?
Before zooming in on the Dividend Aristocrats, here is the list of classifications or “terms” dividend investors often used to describe dividend stocks. The classifications are based on the number of consecutive years of dividend increases. The Dividend Kings and Dividend Aristocrats are the most well-known terms.
||Minimum Years of Dividend Growth
|Dividend Kings||50+ years of consecutive dividend increases|
|Dividend Aristocrats||25+ years of consecutive dividend increases|
|Dividend Champions||25+ years of consecutive dividend increases|
|Dividend Challengers||10 to 24 years of consecutive dividend increases|
|Dividend Achievers||10+ years of consecutive dividend increases|
|Dividend Contenders||5 to 9 years of consecutive dividend increases|
Wondering what the difference is between the Dividend Aristocrats and the Dividend Champions? The Champions include stocks that are not necessarily part of the S&P 500 as the Aristocrats do.
There are variances on the Dividend Aristocrats theme in Europe, where the 25+ years threshold is less strict.
Indices on European Dividend Stocks
Below an overview of the six main indices on European dividend stocks, related methodologies, and selection criteria.
|EURO STOXX® Select Dividend 30||STOXX® Europe Select Dividend 30||S&P Euro High Yield Dividend Aristocrats|
|Example ETF||iShares EURO STOXX Select Dividend 30 UCITS ETF||iShares STOXX Europe Select Dividend 30 UCITS ETF||SPDR S&P Euro Dividend Aristocrats UCITS ETF (Dist)|
|Number of constituents||30||30||40|
|Investment universe||EURO STOXX® index: appr. 300 Eurozone stocks||STOXX® Europe 600 index: 600 European stocks||S&P Europe Broad Market Index (BMI): 1,526 European stocks, only Eurozone companies are included|
|Index rebalancing||Annually (March)||Annually||Quarterly|
|Selection criteria||Positive dividend growth over five years, dividend payments in four of the last five years, non-negative payout ratio (max. 60%)||Quality factors, a dividend yield of at least 30% above the average of the underlying index, non-negative dividend growth over 5 years||The S&P Euro High Yield Dividend Aristocrats Index is designed to measure the performance of the 40 highest dividend-yielding Eurozone companies within the S&P Europe Broad Market Index (BMI), as determined in accordance with the Index methodology, that have followed a managed dividends policy of increasing or stable dividends for at least 10 consecutive years|
|Index weighting||Dividend yield||Dividend yield||Dividend yield|
|MSCI EMU High Dividend Yield||MSCI Europe High Dividend Yield||S&P Europe 350 Dividend Aristocrats|
|Index Ticker||MSCI EMU HDY||MSCI Europe HDY||SPDAEET|
|Example ETF||Amundi ETF MSCI EMU High Dividend UCITS ETF||Amundi MSCI Europe High Dividend Factor UCITS ETF||Not available|
|ETFs ISIN||FR0010717090||LU1681041973||Not available|
|Number of constituents||37 (31-12-20)||57 (31-12-20)||40 (31-12-20)|
|Investment universe||MSCI EMU index: 245 Eurozone stocks (without REITs)||MSCI Europe Index: 434 (31-12-20) European stocks||S&P Europe 350: 350 European Stocks|
|Index rebalancing||Semi-annually||Semi-annually||Annually (January)|
|Selection criteria||Quality factors, a dividend yield of at least 30% above the average of the underlying index, non-negative dividend growth over 5 years||Quality factors, a dividend yield of at least 30% above the average of the underlying index, non-negative dividend growth over 5 years||S&P Europe 350 constituents that have followed a policy of consistently increasing dividends every year for at least 10 consecutive years.|
|Index weighting||Market cap (free float)||Market cap (free float)||Equal weighted|
Two more indices, which are not listed in the tables above, could be interesting as well for UK dividend investors Those two are:
- S&P UK High Yield Dividend Aristocrats (Ticker: SPUKHDA )
- S&P UK Dividend Aristocrats ETF (ticker: UKDV)
Final Thoughts & Conclusion
None of the Indices on European dividend stocks show a methodology that is comparable to the US Dividend Aristocrats’ high standards. The S&P Europe 350 Dividend Aristocrats is the index is the “closes one” with European stocks and 10+ consecutive years of dividend increases, but there is no ETF tracking this index!
All other indices do have a focus on European dividend stock with a high yield profile and a low ambition with respect to consecutive years of dividend increases (often 5 years). Probably not a good starting point for a defensive dividend investor.
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.
Thanks for reading this article.
Please send any feedback, corrections, or questions to service[@]moneyinvestexpert.com.