Heading into 2020, some market observers were wagering that, buoyed by compelling valuations, European equities could finally outperform U.S. stocks. The ProShares MSCI Europe Dividend Growers ETF (CBOE: EUDV) could be a fine way to play that theme.

EUDV tracks the performance of the MSCI Europe Dividend Masters Index, which consists of at least 25 European companies that have consistently increased their dividends for at least 10 consecutive years.

“The US equity market has managed to grow its EPS close to 90% since its pre-crisis peak, compared with just 17% in Asia, 12% in Japan and a paltry 4% in Europe,” according to Goldman Sachs. “Europe’s profit weakness partly reflects its value-dominated sector composition.”

Europe’s equities also look more attractive, with valuations of European and U.S. equities exhibiting their widest divergence since the end of 2016 on certain measures. According to FactSet data, the Stoxx Europe 600 was trading at 14 times forecast earnings, compared to the S&P 500’s 17 times, which represents a wider gap than its long-term average over the past decade.

Examining Europe

In Europe, rising earnings growth could bolster dividend growth in 2020. Investors should consider quality dividend growth stocks that typically exhibit stable earnings, solid fundamentals, strong histories of profit and growth, commitment to shareholders, and management team convection in their businesses.

As Goldman points out, there are good reasons to examine European dividends.

“For Europe and the US, “the cash yield (shown here as the dividend yield plus the buyback yield) in equities remains far above the yield on risk-free bonds,” according to Goldman. “In Europe’s case, this gap is higher now than at any time since the financial crisis.”

EUDV, which holds 56 stocks, has a price-to-book ratio of 2.53x and a distribution yield of 2.26%, implying ample room for dividend growth, according to ProShares data. British and French stocks combine for over 52% of the fund’s weight.

Related: 4 ETFs to Watch After IMF Cuts Global Growth Forecasts 

Investors should consider quality dividend growth stocks that typically exhibit, stable earnings, solid fundamentals, strong histories of profit and growth, commitment to shareholders and management team conviction in their businesses.

“Goldman notes, ‘almost 100%’ of European companies have a dividend yield greater than their corporate bond yield. Look at the comparison between the European benchmark and the US S&P 500 in the chart below,” according to Business Insider.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.