On The Historical Dividend Payout Ratio Of European Stocks

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Includes: BHP, BP, GSK, HSBC, NSRGY, NVS, RDS.B, RHHBY, TOT, VOD
by: David Hunkar

In an article last month, I discussed the continued decline in the dividend payout ratio of U.S. stocks. The following chart shows the historical dividend payout ratio of European stocks based on the MSCI Europe Index. This ratio mostly stays about 40% in Europe and is on an upward trend since mid-2011.

Source: FactSet Dividend Quarterly Europe: December 17, 2013, Factset

Ten of the top European dividend payers based on aggregate dividend amounts paid out to investors last year are listed below with their current dividend yields:

1. Company: Vodafone Group PLC (NASDAQ:VOD)
Current Dividend Yield: 4.06%
Sector: Wireless Telecom
Country: UK

2. Company: Royal Dutch Shell PLC (NYSE:RDS.B)
Current Dividend Yield: 5.16%
Sector: Oil, Gas & Consumable Fuels
Country: UK

3. Company: Total SA (NYSE:TOT)
Current Dividend Yield: 4.80%
Sector: Oil, Gas & Consumable Fuels
Country: France

4. Company: Nestle SA (OTCPK:NSRGY)
Current Dividend Yield: 3.38%
Sector: Food Products
Country: Switzerland

5. Company: Roche Holding AG (OTCQX:RHHBY)
Current Dividend Yield: 3.23%
Sector: Pharmaceuticals
Country: Switzerland

6. Company: HSBC Holdings PLC (NYSE:HSBC)
Current Dividend Yield: 4.92%
Sector: Banking
Country: UK

7. Company: BHP Billiton Ltd (NYSE:BHP)
Current Dividend Yield: 4.34%
Sector: Metals & Mining
Country: UK

8. Company: GlaxoSmithKline (NYSE:GSK)
Sector: Oil, Gas & Consumable Fuels
Current Dividend Yield: 6.02%
Country: UK

9. Company: Novartis AG (NYSE:NVS)
Current Dividend Yield: 2.05%
Sector: Pharmaceuticals
Country: Switzerland

10. Company: BP PLC (NYSE:BP)
Sector: Oil, Gas & Consumable Fuels
Current Dividend Yield: 5.56%
Country: UK

Switzerland has the highest dividend withholding taxes for US investors with a rate of 35%. Hence investors need to take this into consideration when investing in Novartis or other Swiss firms. On the other hand, dividends paid by British companies to US investors are not taxed by the UK. Hence British ADRs are attractive from a tax standpoint. However, dividends paid to American investors by UK REITs will be taxed at 20%. This rate applies to both retirement and non-retirement accounts.

Note: Dividend yields noted above are as of Oct 10, 2014. Data is known to be accurate from sources used. Please use your own due diligence before making any investment decisions.

Disclosure: No Positions.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.