European companies have slowly increased dividend payouts to pre-crisis levels, bolstering the appeal for exchange traded funds that track the region.
For instance, investors interested in dividend payouts that are more attractive than U.S. equities can take a look at European stock-related ETFs like the broad Vanguard FTSE Europe ETF (NYSEArca: VGK), which has a 4.33% 12-month yield. Additionally, the iShares MSCI EMU ETF (NYSEArca: EZU) and the SPDR EURO STOXX 50 (NYSEArca: FEZ), which both focus on Eurozone countries, have a 3.53% and 2.76% 12-month yield, respectively. In contrast, the SPDR S&P 500 ETF (NYSEArca: SPY) has a 1.82% 12-month yield.
The currency hedged WisdomTree Europe Hedged Equity Fund (NYSEArca: HEDJ) comes with a slightly lower 1.84% 12-month yield. Additionally, the Deutsche X-Trackers MSCI Europe Hedged Equity ETF (NYSEArca: DBEU) has a 4.01% 12-month yield, but the ETF includes exposure to the United Kingdom and Switzerland.
According to Markit research, European company stock payouts jumped 10.3% in the fiscal 2014 year-over-year, the fastest dividend growth since 2010, reports Dhara Renasinghe for CNBC.
“The increase in regular dividend payouts since 2010 shows that companies are gradually shifting back towards their pre-crisis dividend policies, and have a growing confidence to return cash as they report higher earnings,” Thomas Matheson, an analyst at Markit, said in the article.
Leading the dividend growth, the bank sector’s dividends jumped 32%. The iShares MSCI Europe Financials ETF (NYSEArca: EUFN), which tracks the European financial sector, shows a 3.2% 12-month yield. However, EUFN does not hedge against currency risks.