Quickpost: Which Listed Company is Europe’s Most Valuable ?

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The most valuable listed company in Europe is French luxury giant LVMH Moet Hennessy Louis Vuitton SA (LVMUY). At the end of 2022, its market capitalization stood at $342.0 billion Euros. In US dollar terms, it was $426.0 billion as of close of Jan 20, 2023.

Below is a short except from a recent journal article:

Some original founders have served investors well. Since LVMH went public in the 1980s, the stock has generated average total returns of 17% a year, and it is now Europe’s most valuable listed company. Richemont’s long-term record is also strong, with 14% returns. Prada is the exception: Its almost 12-year run as a public company has been poor, returning only 3% annually.

Source: Luxury Tycoons Leave Big Shoes to Fill, WSJ

Luxury stocks have indeed produced excellent returns over the long run.

Among the top listed European firms in terms of market capitalization, three luxury companies take a spot as shown in the chart below. The most valuable listed firms on Euronext Stock Exchange as of Dec, 2022 (in billion Euros):

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Source: Statista

Referenced firms:

Disclosure: No positions

An Update on Chile Dividend Withholding Tax

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The Dividend Withholding Tax rate for foreign investors in Chilean equities used to be 35%. This rate has been reduced to 23.9041123%. This is a welcome news for ADR holders.

Below is the YTD returns of Chilean ADRs trading on the US exchanges:

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Source: BNY Mellon

Last year Lithium miner Soc. Quimica y Minera de Chile (SQM) had an astonishing run. It remains to be seen if this year also will be great for SQM investors.

Disclosure: Long BCH

S&P 500 vs. Germany’s DAX Index Return: Charts

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European stocks are performing better so far this year than US stocks. However over the past 5 years and the long run they they have lagged US markets. For instance, the DAX index is up 6.85% YTD while the S&P has increased by 3.88%. Over the past 5 years, the S&P 500 has shot up over 3 times that of the DAX as shown in the chart below:

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Source: Google Finance

Similarly the S&P has crushed the DAX in the long by an astonishing margin.

Source: Google Finance

No wonder most US investors prefer domestic equities than any overseas markets including Germany.

Related ETFs:

  • SPDR S&P 500 ETF (SPY)
  • iShares MSCI Germany Index Fund (EWG)

Disclosure: No positions

The Callan Periodic Table of Investment Returns 2003 To 2022: Chart

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Callan has published their famous The Periodic Table of Investment Returns 2022 edition. This chart shows the annual returns of key indices ranked in order of performance for each calendar year. Last year when most equities declined cash equivalent was the king with a return of 1.46%. REITs were the worst as rising interest rates and other factors crushed the sector. US large caps almost ended the year in bear market.

Click The Callan Periodic Table of Investment Returns 2004 To 2023: Chart for the latest chart.

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Source: Callan

You can download The Callan Periodic Table of Investment Return in pdf format at Callan’s site by clicking the above link.

Two Charts on Dividend Contribution to S&P 500 Total Return

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The dividend yield on the S&P 500 is small relative to other developed markets. Currently the dividend yield is at 1.74%. For many years the rate has hovered around the 2% mark. Though the yield may seem insignificant over the years due to compounding the total return gets amplified due to dividends’ contribution. For example, from 1930 to 2021, 40% of the annualized total return on the S&P 500 was derived from dividends and their reinvestment and the remaining from capital appreciation according to an article at Nuveen:

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Source: Why dividend growth?, Nuveen

The following chart takes a different perspective and shows the S&P 500 composite total return decomposed by decade from 1900 to 2021:

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Source: Dividend Investing for Uncertain Markets: A Quality-First Approach, GQG Partners

A short excerpt from the above piece:

Over the last 121 years of the S&P 500 Index’s total nominal return of approximately 9.4 per cent, dividends (represented by the green bars) and earnings growth (represented by the blue bars) contributed roughly 4.0 per cent and 5.0 per cent, respectively. Changes in valuation (represented by the bronze bars) – or the speculative contribution to returns despite the attractive results over the most recent decade – have mostly been an unpredictable source of price volatility with a lackluster long-term contribution to total return.

Both the above linked articles are worth a read.

Related ETFs:

  1. SPDR S&P 500 ETF (SPY)
  2. iShares Core S&P 500 ETF (IVV)
  3. Vanguard S&P 500 ETF (VOO)
  4. SPDR Portfolio S&P 500 ETF (SPLG)

Disclosure: No positions