European stocks are also discounted relative to their U.S. counterparts. At the end of July the EURO STOXX 50 Index traded at 14.2 times projected earnings compared to 16.7 times on the S&P 500. That could create opportunities in European equities later this year.
Additionally, DBEU is positioned to benefit from European dividend growth, which is showing incremental signs of improvement. “European companies paid out $153.4 billion in the second quarter, up 18.2 percent year-on-year and the best performance on a constant currency basis in at least five years,” Reuters reported earlier this month, citing Henderson Global Investors.
French and Spanish stocks are among the region’s highest yielders and those countries combine for nearly 20% of DBEU’s weight. Excluding the U.K., European dividends have risen just 8% since 2009, indicating the continent has the potential to deliver robust payout growth going forward.
That says DBEU could exposure investors to significant dividend growth in the future with the added comfort of heavy U.K. exposure, an important feature considering that the U.K. is the second-largest developed markets dividend payer in the world after the U.S. [European Dividends are Perking Up]
Deutsche X-Trackers MSCI Europe Hedged Equity ETF
