5 European Dividend Aristocrats Offer Huge Growth and Income Potential With Diversification

The consumer price index data showed this week that the rampant inflation that was in place a year ago is slowing, after peaking at 9.1% year-over-year in June of 2022. The readings for March came in below expectations, as the year-over-year figure slipped to 5.0%. This means there is a chance that, if the Federal Reserve raises rates in early May, it may be the end of the rate hike cycle with the terminal or end rate at 5.00% to 5.25%.

With the interest rate dilemma close to being settled, for growth and income investors, adding top-quality dividend stocks based in Europe to domestic portfolios may be a solid way to go for the rest of the year and into 2024.

Often when income investors look for companies paying big dividends, they are drawn to the Dividend Aristocrats, a group of stocks we have written about frequently. We were intrigued by the top European Dividend Aristocrats, which have a set of rules for entry that vary from their American counterparts:

• They are an S&P Europe 350 Index member.
• They have 10 consecutive years of increasing dividends.
• They possess a float-adjusted market capitalization of at least US$3 billion.
• Their median daily trading volume is at least US$5 million.

Ten years is far less than the 25 required by companies in the S&P 500. Typically this is because European companies do not value the dividend in the same manner as American companies. In fact, European companies tend to have a more conservative approach to rewarding shareholders with dividends.

We screened the top 30 European Dividend Aristocrats looking for the most liquid and well-known names for investors who are looking for income and a degree of diversification away from the American indexes. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Diageo

This is one of the largest producers of alcoholic beverages in the world. Diageo PLC (NYSE: DEO) produces, markets and sells alcoholic beverages worldwide, including scotch whiskey, gin, vodka, rum, beer, Irish cream liqueurs, wine, Raki, tequila, Canadian and American whiskey, Cachaça and brandy, as well as adult beverages and ready to drink products. The company’s premium brands include Johnnie Walker, Smirnoff, Captain Morgan, Baileys, Tanqueray and Guinness.

Its reserve brands include Johnnie Walker Blue Label, Johnnie Walker Green Label, Johnnie Walker Gold Label 18-year-old, Johnnie Walker Gold Label Reserve, Johnnie Walker Platinum Label 18-year-old, John Walker & Sons Collection, Johnnie Walker The Gold Route, Johnnie Walker The Royal Route and other Johnnie Walker super-premium brands, as well as The Singleton, Cardhu, Talisker, Lagavulin and other malt brands.

Shareholders receive a 1.96% dividend. BofA Securities has a $203 price target on Diageo stock. The consensus target is $200.17, and the final trade for Wednesday was reported at $185.42.