U.S. Markets closed

5 ETFs to Capture Europe’s Hot Dividend Payers

This article was originally published on ETFTrends.com.

In face of rising volatility and a prolonged low-yield environment despite talks of rising rates, investors are giving dividend stocks a second look, and with European economic fundamentals looking better than they have for the best part of a decade, one may consider diversifying with Europe dividend exchange traded fund.

“It’s a market in which to be very cautious [and] shares of high-yielding companies offer compelling income,” Emmanuel Hauptmann, a fund manager at RAM Active Investments, told the Wall Street Journal.

Among the biggest listed companies in Europe, about 83% are expected to increase dividends in 2018, the highest share in at least a decade, according to J.P. Morgan research.

In Europe, 20 listed companies are expected to raise dividends 50% or more this year, including CYBG PLC, Deutsche Bank AG , Standard Chartered PLC and Barclays PLC.

Related: Why We Like Europe, Particularly the Eurozone

Dividends per share are projected to rise at an annual pace of 6% for the benchmark Euro Stoxx 50 Index, the fastest rate since early 2016 based on upgraded analysts' estimates for the next 12 month outlook. After the recent broad market pullback, dividends also look much larger when compared with a company's stock price, with the Euro Stoxx 50 showing a 3.8% dividend yield, its highest since December 2016.

“People look at dividends when markets are weak, we believe we should look at dividends all the time,” Dale Winner, a fund manager at Wells Fargo Asset Management, who added to his holdings during recent selloffs with picks including European banks DNB ASA and UniCredit SpA, told the WSJ.

Potential investors interested in the Europe dividend play may look to a number of targeted ETF strategies to choose from. For instance, the First Trust STOXX European Select Dividend Index Fund (FDD) and WisdomTree Europe Quality Dividend Growth Fund (EUDG) capture large dividend-paying European companies, and the WisdomTree Europe SmallCap Dividend Fund (DFE) follows small-cap Europe dividend stock exposure. The ProShares MSCI Europe Dividend Growers ETF (EUDV) is comprised of companies that have consistently increased their dividends for at least 10 consecutive years. FDD has a 2.96% 12-month yield, EUDG shows a 1.53% 12-month yield, DFE comes with a 2.70% 12-month yield and EUDV has a 2.38% 12-month yield.

There are also a number of other Europe dividend ETF strategies that incorporate other various factors in their indexing methodologies. For instance, the O’Shares FTSE Europe Quality Dividend ETF (OEUR) , which has a 3.23% 12-month yield, incorporates quality screens.

For more information on European markets, visit our Europe category.