39 European Dividend Aristocrats for International Income Growth
Most income investors are already familiar with the S&P 500 Dividend Aristocrats, a group of 53 American companies that have increased dividends at least 25 years in a row. As a group, these have been solid holdings for long-term investors, outperforming both the Standard & Poor's 500-stock index and the Dow Jones Industrial Average over the past decade.
But they're not the only dividend royalty on the planet. Far from it.
There's also a collection of 39 stocks across the pond that have earned the title of European Dividend Aristocrats. These don't have quite the same dividend longevity of their American counterparts, with the index requiring a minimum of just 10 consecutive increases to their annual payouts. But they do have a leg up on the U.S. Aristocrats - they tend to yield more, offering 3% as a group versus just 2.5% for the American Aristocrats.
Here's a look at each of these lesser-known (but still very dependable) European Dividend Aristocrats:
Ashtead Group
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Market value: $15.3 billion
Dividend yield: 1.2%
Consecutive annual dividend increases: 14
U.K.-based Ashtead Group (ASHTY, $125.75) is a major player in the U.K. and American rental equipment markets. Ashtead leases construction and industrial equipment to customers that use its machines for road building, facilities management, climate control, special events and disaster relief.
The company's Sunbelt division is the second largest equipment rental firm in the U.S., with 712 locations nationwide. Its A-Plant division operates from 187 rental locations in the U.K. and is that country's largest equipment renter.
The majority of Ashtead's growth comes from the states. Last year, the company invested $1 billion in its U.S. equipment fleet and spent $476 million to open 73 new Sunbelt locations. Another 60 locations will open this year.
The company pays dividends semi-annually, and five-year dividend growth has averaged an impressive 45% annually.
Associated British Foods
Courtesy Alexandre Dulaunoy via Wikimedia Commons
Market value: $25.5 billion
Dividend yield: 1.7%
Consecutive annual dividend increases: 18
Associated British Foods (ASBFY, $32.56) is a multinational food processor and retailer operating in 50 countries. Americans may be familiar with a few of its brands, including Ovaltine hot chocolate, Twinings teas, Mazola corn oil and Kingsmill bread. ABF also owns the Primark clothing brand and a chain of 350 Premark retail stores across Europe and North America.
ABF's two largest businesses are grocery and sugar, but operations in agriculture, baking ingredients and retail also contributed to sales growth. The company's earnings per share improved 20% last year as a result of higher European Union sugar prices, reduced expenses in the bakery and special ingredients businesses, and the opening of 30 new Primark stores. Europe is lifting quotas on sugar this year, which should provide further boost to the company's sugar operations.
Associated British Foods has improved its dividend by an average of 7.4% annually over the past five years, including a 12% hike in 2017 to 41 pence (roughly 54 cents).
BAE Systems
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Market value: $28.8 billion
Dividend yield: 3.2%
Consecutive annual dividend increases: 14
BAE Systems (BAESY, $36.25) is one of the world's largest defense contractors, serving government customers mainly in the U.K. and U.S. The company designs and manufactures military aircraft, land vehicles and surface ships and is expanding its capabilities in cyber security and intelligence.
One of the company's largest contracts is supplying electronic warfare systems for F-35 jet fighters - the world's largest defense program. BAE also recently secured multibillion-dollar contracts to build Typhoon jets for Qatar and Saudi Arabia.
BAE believes its future growth will come from expanding internationally, as well as adjacent markets such as cyber security. The company's most recent contract awards from the U.S. military include a $1.2 billion contract with the Marines for amphibious combat vehicles and a $484 million contract with the Army for missile warning systems.
Despite flat revenues last year, BAE was able to increase cash flow from operations by 54% and EPS by 8% while significantly reducing debt. BAE's dividend has improved for 14 consecutive years, though its progress has been slow, at just 2.4% annually over the past five years.
British American Tobacco
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Market value: $115.1 billion
Dividend yield: 5.3%
Consecutive annual dividend increases: 20
British American Tobacco (BTI, $51.09) isn't terribly well-known in the U.S., but it's the world's largest publicly traded tobacco company. BAT owns the popular Dunhill and Rothmans cigarette brands, which are sold to millions of consumers worldwide.
BAT paid $49.4 billion in 2017 to acquire U.S. competitor Reynolds American and a portfolio of brands that included Camel and Newport cigarettes, as well as Vype and Vuse e-cigarettes. BAT plans to begin marketing the acquired e-cigarette brands internationally.
Excluding the impact of the Reynolds acquisition, earnings per share rose by nearly 10% last year. BAT aims to deliver future EPS gains each year at high-single-digit levels. Earnings should receive a boost in 2018 from more than $400 million in anticipated acquisition-related synergies.
The last increase to the quarterly dividend on BTI's
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