While the U.S. was a dividend leader last year and emerging markets contributed $1 to every $7 paid dividends globally, Europe ex-U.K. lagged in dividend growth terms.
Ex-U.K., European dividends have risen 8% since 2009, indicating the continent has the potential to deliver robust payout growth going forward and that growth is finally starting to take shape with contributions from some familiar names. Research firm Markit “expects a total payout of €196.4 billion ($313.9 billion) from companies in the MSCI Europe ex UK index in the current financial year,” reports Tommy Stubbington for the Wall Street Journal.
That works out to be dividend growth of 7.7%, a rosier assumption than Markit’s mid-year estimate of 7.2%, according to the Journal. While there is no shortage of Europe exchange traded funds, that bounty of funds does not mean all are suitable for dividend growth.
The WisdomTree Europe Hedged Equity Fund (NYSEArca: HEDJ). HEDJ has risen to acclaim because of its euro hedge, a useful trait in these times of euro weakness and dollar strength. However, emphasis on HEDJ’s currency hedged status leads to overlooking the ETF’s other important trait: A devotion to dividend-paying exporters. [Hedged Europe ETF Shines]
As the Journal notes, German companies are leading European dividend growth while France remains the region’s largest dividend payer, excluding the U.K. The Eurozone’s two largest economies combine for nearly half of HEDJ’s weight. HEDJ also allocates nearly 4.7% of its weight to Banco Santander (NYSE: SAN), the company set to be the Eurozone’s largest dividend payer this year. Santander’s U.S.-listed shares yield 6.9%.
Ex-U.K., European companies paid over $153 billion in second-quarter dividends, representing 18.2% year-over-year growth.
The WisdomTree Europe Dividend Growth Fund (NYSEArca: EUDG), which debuted in May, allocates 22.1% of its weight to Germany and France, but since it is not a dedicated Eurozone ETF, EUDG offers investors an avenue to another important European dividend growth market: Switzerland. [A Fine ETF for Growing European Dividends]