Dividend Stocks
20 High-Yielding European Utility Stocks
A recent “Heard on the Street” column in The Wall Street Journal discussed about the juicy dividends offered by European stocks.
From the article:
“Average dividend yields on European stocks are now higher than those on government bonds for only the third time in 30 years. On the past two occasions, in early 2003 and 2009, that heralded a rally in equities. But although equity markets are below long-term price-to-book ratios, and European stocks have rallied in recent weeks, analysts are cautious about forecasting big gains, noting an uncertain growth outlook and lingering fears on sovereign debt. That is good news for income investors.
This year, European equities will yield 4.1%, estimates UBS, almost twice that of U.S. peers. That is above the current yield on AA-rated corporate bonds (3.3%) and the coupon on a 10-year government bond for a weighted average of 11 euro-zone countries (3.6%). Unlike the latter two, dividend yields are well above their 10-year average.
True, dividends can be cut. Payments have been cut some 40% since 2008, versus cuts of less than 30% in the past three recessions. The cancellation of BP’s dividend in June took 12% off forecasts for U.K. companies’ second-quarter payments, notes Capita Registrars. Corporate earnings could still disappoint: UBS forecasts of 24% European earnings growth in 2010 and 10% in 2011 compare with a 7% long-run average, and a contraction last year and in 2008.
But corporate cash balances are at or near all-time highs and gearing at multiyear lows. Companies are slowly returning to the acquisition trail: July’s M&A deal volume globally was the highest this year, notes Dealogic, with Europe leading the way. But dividend payments still look sustainable: Dividend cover at 1.6 times free cash-flow is in line with a 10-year average, notes UBS.”
European banks have traditionally paid high dividends in the past. However it is better to avoid the majority of them as they are still reeling under pressure from many issues related to the sub-prime crisis. Quoting JP Morgan, the journal piece noted that telecoms, energy and utilities offer 5% to 6% yields.
In order to identify the top utilities in Europe, I used the Dow Jones Stoxx Europe 600 Utilities Index.This index offers exposure to 31 of the large European water, gas and electricity companies.
The Top 20 components in the Dow Jones Stoxx Europe 600 Utilities Index are listed below with their dividend yield as of August 9, 2010:
1.E.ON AG (OTC: EONGY)
Current Dividend Yield: 6.18%
Germany
2.GDF Suez (OTC: GDFZY)
Current Dividend Yield: 4.68%
France
3. Enel (E)
Current Dividend Yield: 5.61%
Italy
4.RWE AG (OTC: RWEOY)
Current Dividend Yield: 6.33%
Germany
5.Iberdrola (OTC: IBDRY)
Current Dividend Yield: 5.51%
Spain
6. National Grid Plc (NGG)
Current Dividend Yield: 8.34%
UK
7. Scottish & Southern Energy (OTC: SSEZY)
Current Dividend Yield: 3.44%
UK
8.EDF (OTC: ECIFF)
Current Dividend Yield: 3.09%
France
9. Centrica (OTC: CPYYY)
Current Dividend Yield: 5.32%
UK
10. Fortum (OTC: FOJCY)
Current Dividend Yield: 5.48%
Finland
11. Veolia Environnement (VE)
Current Dividend Yield: 5.18%
France
12. International Power (OTC:IPRPY)
Current Dividend Yield: 4.10% *
UK
* Update: International Power owners set for £1.4bn payout
13.Energias de Portugal (OTC: EDPFY)
Current Dividend Yield: 5.83%
Portugal
14. SNAM Rete Gas SpA (OTC: SNMRY)
Current Dividend Yield: 4.87%
15.United Utilities (OTC: UUGRY)
Current Dividend Yield: 7.67%
UK
16. Terna
Italy
17. Suez Environment (OTC: SZEVY)
Current Dividend Yield: 4.17%
France
18. Severn Trent (OTC: SVTRY)
Current Dividend Yield: 3.28%
UK
19. Red Electrica Espana (OTC: RDEIY)
Current Dividend Yield: 5.40%
Spain
20. Gas Natural SDG (OTC: GASNY)
Current Dividend Yield: 7.79%
Spain
Ten British Stocks Paying More Than 5% Dividends
Despite the recent run up in stock prices, there are plenty of foreign stocks that have high dividend yields. The following are ten British ADR stocks in a variety of sectors that pay dividends of more than 5% as of market close August 3, 2010:
1. Company: BT Group PLC (BT)
Sector:Telecom
Current Dividend Yield: 5.85%
2. Company: British American Tobacco PLC (BTI)
Sector: Tobacco
Current Dividend Yield: 6.26%
3. Company: Vodafone Group Plc (VOD)
Sector: Telecom
Current Dividend Yield: 7.27%
4. Company: National Grid Plc (NGG)
Sector: Electric Utilities
Current Dividend Yield: 8.46%
5. Company: Aviva Plc (AV)
Sector: Life Insurance
Current Dividend Yield: 7.15%
6. Company: GlaxoSmithKline PLC (GSK)
Sector: Drugs
Current Dividend Yield: 5.08%
7. Company: J Sainsbury PLC (OTC: JSAIY)
Sector: Grocery Retail
Current Dividend Yield: 5.66%
8. Company: BAE Systems PLC (OTC: BAESY)
Sector: Aerospace & Defense
Current Dividend Yield: 5.54%
9. Company: Centrica Plc (OTC: CPYYY)
Sector: Natural Gas Utilities
Current Dividend Yield: 5.49%
10. Company: United Utilities Plc (OTC: UUGRY)
Sector: Water Utilities
Current Dividend Yield: 7.14%
Six Foreign Bank Stocks With High Dividend Yields
The following six non-European bank stocks have dividend yields of over 5% as of June 30,2010:
1.Bank: BBVA Banco Frances (BFR)
Current Dividend Yield: 10.78%
Country: Argentina
2.Bank: Banco de Chile (BCH)
Current Dividend Yield: 6.45%
Country: Chile
3.Bank: DBS Group Holdings Ltd (OTC: DBSDY)
Current Dividend Yield: 8.49%
Country: Singapore
4.Bank: Westpac Banking Corp (WBK)
Current Dividend Yield: 6.66%
Country: Australia
5.Bank: National Australia Bank Ltd (OTC: NABZY)
Current Dividend Yield: 6.77%
Country: Australia
6.Bank: Australia and New Zealand Banking Group Ltd (OTC: ANZBY)
Current Dividend Yield: 5.27%
Country: Australia
17 High-Yielding Foreign Stocks in the OTC Markets
I ran the stock screener for OTC stocks yielding more than 5% dividends and having market caps of at least $5B. The following 17 stocks met the above criteria:
1. Telstra Corporation Limited (TLSYY)
Current Dividend Yield: 9.40%
Sector: Telecom
Australia
2. Koninklijke KPN N.V. (KKPNY)
Current Dividend Yield: 9.38%
Sector: Telecom
The Netherlands
3. United Utilities Group PLC (UUGRY)
Current Dividend Yield: 8.39%
Sector: Water Utilities
U.K.
4. Telekom Austria AG (TKAGY)
Current Dividend Yield: 7.95%
Sector: Telecom
Austria
5. Advanced Info Service PCL (AVIFY)
Current Dividend Yield: 7.69%
Sector: Telecom
Thailand
6. Zurich Financial Services (ZFSVY)
Current Dividend Yield: 6.73%
Sector: Financial Services
Switzerland
7. CLP Holdings Limited (CLPHY)
Current Dividend Yield: 6.65%
Sector: Utility
Hong Kong
8. RWE AG (RWEOY)
Current Dividend Yield: 6.58%
Sector: Utility
Germany
9. Deutsche Lufthansa AG (DLAKY)
Current Dividend Yield: 6.35%
Sector: Airline
Germany
10. E.ON AG (EONGY)
Current Dividend Yield: 6.34%
Sector: Utility
Germany
11. J Sainsbury plc (JSAIY)
Current Dividend Yield: 6.14%
Sector: Retail
U.K.
12. EDP-Energias de Portugal,S.A (EDPFY)
Current Dividend Yield: 6.07%
Sector: Utility
Portugal
13. National Australia Bank Ltd. (NABZY)
Current Dividend Yield: 6.03%
Sector: Banking
Australia
14. Eisai Co., Ltd (ESALY)
Current Dividend Yield: 5.43%
Sector: Biotechnology
Japan
15. Swisscom AG (SCMWY)
Current Dividend Yield: 5.43%
Sector: Telecom
Switzerland
16. International Power plc (IPRPY)
Current Dividend Yield: 5.22%
Sector: Utility
U.K.
17. Solvay S.A. (SVYSY)
Current Dividend Yield: 5.11%
Sector: Chemicals
Belgium
The majority of the stocks mentioned above are in the telecom or utility sector. National Australia Bank(OTC: NABZY) split its stock 5:1 back in March 2008. On Friday the ADR closed at $21.83.
7 Foreign Oil Stocks Yielding Over 4% Dividends
Ever since the Deepwater Horizon oil spill billions of dollars have been wiped out from the market cap of BP. The stock price is down about 44% year-to-date. Currently BP has a dividend yield of 11.51%.
From the Journal’s story titled “BP Should Resist Slashing Dividend “:
“Following Tuesday’s letter signed by 31 members of Congress calling for BP to suspend dividends, the company’s stock, yielding 11%, now appears priced for a deep cut. Yet there are good reasons why BP should resist these demands, at least for now. The consensus estimate for BP’s operating cash flow this year is $34 billion. Capital expenditure and acquisitions swallow $28 billion and dividends another $10.5 billion, leaving a deficit of $4.5 billion. Even then, year-end net debt would be about $31 billion, equating to 22% of total capitalization.
BP’s target “gearing” ratio is up to 30%, implying extra debt capacity of about $17 billion. That is about the same as the top end of the first year’s pretax cleanup costs estimated in the Credit Suisse report cited in the congressional letter. So BP can likely handle the costs without touching dividends.”
Despite the low stock price and high yield, many investors are likely to stay away from BP until the picture gets clearer.There are too many known unknowns such as legal costs, liability limit issues, claim costs, dividend cuts, political pressures, etc.
Many other foreign oil companies have been beaten down in recent weeks due to the BP disaster. This presents some good opportunities to pick up high quality stocks in this sector.
The following seven foreign oil stocks have dividend yields of more than 4% as of June 10, 2010:
1. YPF SA (YPF)
Argentina
Current Dividend Yield: 7.48%
2. Ecopetrol SA (EC)
Colombia
Current Dividend Yield: 4.57%
3. Petrobras Energia SA (PZE)
Argentina
Current Dividend Yield: 4.93%
4. Statoil ASA (STO)
Norway
Current Dividend Yield: 4.59%
5. Repsol YPF SA (REP)
Spain
Current Dividend Yield: 6.36%
6. ENI SpA (E)
Italy
Current Dividend Yield: 6.85%
7. Total SA (TOT)
France
Current Dividend Yield: 6.88%
Twenty Small-Cap Stocks Yielding Over 10% Dividends
The following twenty Russell 2000 index constituents have yields of over 10% as of market close last Friday:
| S.No. | Name | Ticker | Dividend Yield as of June 4, 2010 |
|---|---|---|---|
| 1 | American Capital Agency Corp. | AGNC | 20.9% |
| 2 | Resource Capital Corp. | RSO | 17.8% |
| 3 | Capstead Mortgage Corporation | CMO | 17.4% |
| 4 | Hatteras Financial Corp. | HTS | 17.1% |
| 5 | Prospect Capital Corporation | PSEC | 15.9% |
| 6 | Anworth Mortgage Asset Corporation | ANH | 15.8% |
| 7 | Invesco Mortgage Capital Inc | IVR | 15.1% |
| 8 | Northstar Realty Finance Corp. | NRF | 13.1% |
| 9 | MFA Mortgage Investments | MFA | 12.9% |
| 10 | Kohlberg Capital Corp. | KCAP | 12.6% |
| 11 | General Maritime Corporation | GMR | 12.2% |
| 12 | Walter Investment Management Corp. | WAC | 12.2% |
| 13 | Blackrock Kelso Capital Corp. | BKCC | 12.1% |
| 14 | Triangle Capital Corporation | TCAP | 11.5% |
| 15 | Apollo Investment Corp. | AINV | 10.9% |
| 16 | Fifth Street Finance Corp. | FSC | 10.8% |
| 17 | Teekay Tankers Ltd. | TNK | 10.3% |
| 18 | PennantPark Investment Corp. | PNNT | 10.3% |
| 19 | Ares Capital Corporation | ARCC | 10.3% |
| 20 | Main Street Capital Corporation | MAIN | 10.1% |
It must be noted that most of these stocks have very small market caps. These stocks have high betas and may not be suitable for all investors.
