As themoney to cover the basics is enough of a challenge. From
phone service to mail delivery to electricity, there are certain
regular expenditures that simply can't be avoided.
Yet Europeanstocks of all stripes have taken it on the chin
during the past few years anyway, regardless of what type
ofeconomic exposure they have. And that has created some
eye-popping dividend yields.
In fact, there's one sector in Europe that routinely sports
double-digit yields these days: Telecom. Leading phone service
providers, which tend to generate stable operating profits in any
economic climate, haven't been able to avoid the European-wide
sell-off. Check out the super-high yields youwill find for these
Make no mistake, consumers in these countries are feeling
pinched these days, but phone bills are up there with death
andtaxes in terms of unavoidable certainties. Still, as all of
these firms face the same industry dynamics, it's wisest to focus
on just one two of these stocks for your portfolio, perhaps in the
relatively stronger European economies of Germany, Austria or the
Not a fan of telecom stocks? Well, I've dug deeper to find a
handful of other European industry dominators, all of which sport
dividend yields of at least 5%. Take U.K. drug maker
Astra Zeneca (
as an example. A broad portfolio of existing drugs coupled with
robust research efforts enable this pharmastock to hike itsdividend
year-in and year-out. In 2003, that meant a dividend of 73 cents a
share. By 2011, that figure had risen almost fourfold to $2.80.
That's an 18%compound growth rate.
In the world of high-yieldinvesting , there is no free lunch, so
as you climb theyield ladder, you're taking on added risk. As a
result, the double-digit yielders noted in the table above might
carry more risk than you should be willing to accept. High yields
often implicitly suggest that dividends may eventually need to be
pared back our eliminated outright.
That's why it's wiser to focus on the companies with yields in
the mid to high single-digits. German automaker Daimler is a great
example. Ever since European car and truck sales began slumping in
early 2011, Daimler (which owns the coveted Mercedes-Benz brand)
has been out of favor.Shares have fallen from the low $70s in early
2011 to a recent $46, which has pushed thedividend yield up to
This doesn'tmean Daimler won't take steps to preservecash if
business slows. After all, this dividend was cut from $2.56 a share
in 2007 to just 77 cents a share in 2008. But as it has been the
case during every economic slowdown in the past, this company's
dividend always comes back stronger. In 2011, Daimler again
increased its dividend to $2.81. Frankly, this dividend looks
fairly solid right now, even in the face of tremendous economic
challenges.Analysts expect Daimler's profits to rise roughly 5% in
2013 to roughly $6 a share and expect the dividend to remain at
Risks to Consider:
If Europe slips from its current mildrecession into a much
deeper one, then dividend cuts may become unavoidable. Yet over the
long haul, these dividends would likely be restored as economies
stabilize and rebound.
Action to Take -->
One of the best ways to find high-yieldinginvestments is to seek
out-of-favor companies, industries and economies. Europe is surely
out of favor right now. The key is to read the company's financials
to be sure that thebalance sheet andcash flow statement can support
continued dividends at current levels. You can also follow
, where StreetAuthority's Co-Founder Paul Tracy shows the best of
the world's highest-yielding opportunities in foreign markets.
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