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The European Dividend Aristocrats: A Global Income Solution

  • An introduction to Durig’s latest income solution, the European Aristocrats.
  • Targeting high quality dividends of European blue chips.
  • Designed to generate high levels of income and even the potential for income growth over time.

Announcing Durig’s latest addition to its portfolio of income solutions, the European Dividend Aristocrats Portfolio. This one of a kind portfolio targets 20 high yielding blue-chip stocks* (the actual securities held in the portfolio are American Depository Receipts and trade just like stocks) listed on various European exchanges for investment and was designed to produce high levels of dividend income and even the potential for growth of income over time. The idea is to invest only in the stocks of companies with a current high dividend and a long history of continuous annual dividend increases. Focusing investment on companies that increase their dividends annually should position the portfolio to consistently capture to the “cream of the crop” of higher dividend companies of a variety of  European exchanges.

The European Aristocrats encompass much of the same methodology of one of Durig’s successful equity-based income portfolios, the Dividend Aristocrats. An “Aristocrat” is a reputable blue chip company that have long histories of increasing their dividends each year (like those held in the portfolio). These companies are often very large, established firms, with strong track records of consistent growth and stable earnings, and historically, have proven their ability to recover from market downturns. Durig has expanded this idea to the European equity markets in the European Aristocrats to bring investors new and exciting income opportunities that come together in a portfolio designed for reliable income and growth over time.

Global Dividends

The European Aristocrats Portfolio target high yielding blue chip stocks (with respect to their dividends) listed on various European Exchanges with a minimum 25 year history of increasing the dividend paid each year to produce strong levels of global dividend income.

An article from Barrons has named foreign dividend stocks like those contained in Durig’s European Aristocrats Portfolio “one of the best income investments for 2020”.

“With higher dividend yields than U.S. stocks, foreign shares are a good source of income. Ample yields reflect the outperformance of U.S. equities in the past decade and the emphasis overseas on dividends, rather than on stock buybacks. If the dollar weakens and international markets finally best the S&P 500 index, the sector could be a big winner.”

Income.  Everyone needs it.  We all want more of it. Find a higher income with the European Aristocrats.

With an average dividend yield of over 3%, the European Dividend Aristocrats are looking to be the income solution that many income investors have been seeking, and have the added benefit of spreading investment risk across many industries and countries.  Additionally, regular dividend payments help to reduce negative impacts from interim stock price declines.

Income Growth Over Time

Historically, the majority of blue chip stocks pay their shareholders dividends and over time tend to increase dividends in an effort to reward shareholders and increase stock value. Continual increases in dividend payouts can help to reduce much of the negative impacts of inflation, as historically, dividends tend to outpace the rate of inflation. Because the European Aristocrats Portfolio focuses on historical dividend increases, Durig Capital believes it is able to capture the growing dividends of established blue-chip companies with relative consistency, and should lead to income growth over time and becomes much more pronounced if dividends are reinvested over time, compounding growth.

With time, investors should benefit from these dividend payments to generate stable, and even growing, portfolio income.

Blue Chip Peace of Mind

The stock of the companies in this strategy are considered to be “blue chip”, so there is the added layer of perceived relative security beyond that of a lesser known company.

Many are familiar with the idea that blue-chip stocks tend to generate more stable earnings. In market downturns or periods of high volatility, investors often turn to these as somewhat of a safe haven for their reliability and consistent dividend payments.

Ben Kirby, Money Manager at Thornburg Investment Management, explains how he weathers market volatility and downturns in an interview with CNBC:

To hedge against a possible recession in the next two years, Kirby is sticking to stocks that pay investors while they hide out:

“I like dividend-paying equities. To me they’re one of the most attractive asset classes today, because hands you win, and tails you don’t lose too much,” Kirby said. “If stocks keep going up, your dividend-paying stocks will participate in that and … if stocks decline and we do go into a recession, then your dividend-paying equities can be defensive.”

Blue-chip companies can also offer relative stability in times of slowing economic growth due to their strong management and their capacity to generate consistent earnings and healthy levels of growth. In bear markets, investors tend to worry less about their blue-chip investments as, historically they have proven their resiliency and ability to recover.

Blue-chips typically have robust fundamentals such as strong balance sheets, cash flows, proven and scalable business models, and consistent growth over time. Many investors recognize blue-chips to be more secure than other investment types because they can turn to these investments for consistent (and growing) dividend payments over time, with the dividends helping to reduce adverse impacts of short term drops in stock price.

Improved Diversification

The large number of European blue chip stocks held in the portfolio can help improve overall portfolio diversification due to the wide range of companies, industries, and countries the portfolio encompasses.

What better way to diversify than by spreading your investment risk across nations?

Additionally, the equal weighting used means that investment exposure to any one country or industry is limited. This way if one of the positions stumbles momentarily, the wide diversity of blue-chip stock positions in the portfolio should still perform as expected.

Strong Dividends, Strong Companies

Kieran Kirwan, Director at ProShares, spoke on the erratic nature of volatility and looked to quality dividend strategies as a way to aid portfolios in smoothing out serious moves:

“There are common traits that define high quality companies that grow their dividends. They tend to have long histories of profit and growth. They typically have strong fundamentals and stable earnings. And their strength comes from the top, from management teams with conviction and a firm commitment to shareholders,” Kirwan explained.

Companies that pay out more of their retained earnings through dividends to shareholders are thought to be increasing shareholder value.  Shareholders that feel they are rewarded for their investment are likely to stay invested in the company, furthering the merit (and attractiveness) of the investment itself. Consistent dividends are the core of the European Aristocrats because the dividends of Aristocrat companies are expected to increase each year, so as these increasing dividends are reinvested over the years the dividend income should grow over time.

Summary

Dividend Aristocrats are reputable blue chip companies (like those held in the European Aristocrats Portfolio) and tend to be large, established firms, with strong track records of consistent growth and stable earnings, and historically, have proven their ability to recover from market downturns.

Durig’s European Aristocrats Portfolio focuses investment on the stock of these types of companies for their stable and growing dividends, and should produce consistent dividend income and even the potential to grow income over time, with regular dividend payments helping to cushion the impact of any interim stock price declines. The portfolio can also help to improve overall diversification by spreading investment risk across various countries and industries, allowing investors to pursue global income opportunities from the comfort of their own home.

For those wishing for more income and peace of mind in today’s uncertain world, Durig’s European Aristocrats Portfolio may be a solution with professional management, all at a very low cost.  To learn more, call us at (971) 732-5121, or email us at info@durig.com.

For More Information

If you have any questions or would like further information Durig’s European Aristocrats Portfolio, please call Durig at (971) 327-8847, or email us at info@durig.com.

Durig Capital has several high yield portfolios available, click below to learn more.

Fixed Income 2 – FX2
Dividend Aristocrats
Income Aristocrats
Dogs of The Dow
Dogs of The S&P 500
Dogs of Europe
European Dividend Aristocrats

About Durig

Durig Capital provides investors with a specialized, transparent fiduciary service at a very low cost. Most of our client accounts are custodied in their own name at TD Ameritrade Institutional, a large discount service provider that is SPIC insured, or at Interactive Brokers. We have now started offering our highly successful FX2 service to clients of other Registered Investment Advisors through segregated accounts at TD Ameritrade. Please ask us to learn how this might work for you and your current advisor.

Risk Disclaimer: Any content on this review should not be relied upon as advice or construed as providing recommendations of any kind. It is your responsibility to confirm and decide which trades investments to make. Invest with only with risk capital; that is, with money that, if lost, will not adversely impact your lifestyle and your ability to meet your financial obligations. Past results are no indication of future performance. In no event should the content of this correspondence be construed as an express or implied promise or guarantee.

Durig Capital is not responsible for any losses incurred as a result of this article Information provided in this correspondence is intended solely for informational purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.