Stocks on both sides of the Atlantic are being decked by the coronavirus pandemic, but today’s headwinds could be presenting investors with a chance to embrace higher quality European ideas, including the ProShares MSCI Europe Dividend Growers ETF (CBOE: EUDV).
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. There is some support for EUDV in the form of a massive, virus-related package planned in the U.K. the fund’s largest geographic exposure.
“Britain’s bumper £350 billion package to support businesses will be a huge boost in these unprecedented times, but the chancellor may soon need to come back with more,” reports Callum Keown for Barron’s.
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.
Challenges, But Opportunity Remains
Many are worried about the potential negative impact of the coronavirus on China’s economy, which includes the potential fallout from the many European economies that rely heavily on an export industry that is tied to the global economy.
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.
EUDV allocates a combined 34.60% of its weight to healthcare and consumer staples names, giving it some defensive positioning at a time when equity investors are looking for avenues to reduce volatility.
According to the Global Funds 2020 Positioning Themes report compiled by Copley Fund Research, global fund managers now have the biggest overweight position in European stocks on record while including the least amount of exposure to emerging markets in six years relative to a benchmark.
EUDV yields 2.56%, underscoring the point that this is a dividend growth fund, not a high yield play that could be vulnerable to negative dividend action in a turbulent market setting, such as the one investors are currently enduring.
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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.