Here is my yearly list of the highest dividend yield companies in Europe and the UK. Each year in May, with the bulk of the previous year's financial reporting behind us, I compile a list of Europe's highest dividend yield stocks to identify attractive market sectors and possible high yield investments. Make sure you read to the end of the article where you can find my other European high dividend articles that may be of interest. I have also selected my top 10 high dividend picks from the list based on the “Dogs of the Dow” investment strategy popularised by Michael O’Higgins in his book Beating the Dow. The strategy suggests that every year you select the ten Dow Jones Industrial Index stocks with the highest dividend yields. All stocks are sold after one year and then reinvested in the then ten highest dividend yield shares.


The average dividend yield of my 10 top dividend yield companies is 7.4%, higher than the 6.9% last year. 
Not a bad return if you consider the near non existing interest rates available on bank deposits and high quality bonds in Euro’s (1.4% on one year German government bonds for example).

What is also surprising is that the share prices are not much above their 52 week lows. On average my top 10 picks are trading at just over 15.4% (15% in 2010) above their 52 week lows. This means these high dividend yield companies have not participated in the market recovery at all. This year the list of industries is more mixed than last year. However telecommunications make up by far the largest industry sector in the top 20 with seven companies listed. 

Let’s take a quick look at the performance of the strategy over the last 2 years.

Year My top 10 return Top 20 return Stoxx 600 return My top 10 v Index Top 20 v Index
2009 15,00% 18,40% 15,60% -0,60% 2,80%
2010 8,90% 10,20% 10,30% -1,40% -0,10%


Source: Bloomberg (Returns exclude dealing costs and taxes)

Looking at the above table all I can say is don’t pay any attention to the companies I chose. You would have had higher returns by just buying the top 20. …

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