Indices on European Dividend Stocks compared

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.

 

Classifications	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
Index Ticker	SD3GU	SD3R	SPEUHDAN
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)
ETFs ISIN	DE0002635281	DE0002635299	IE00B5M1WJ87
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.