Should dividend hunters look to Europe for quality income?

Friday, Jun 21 2013 by
9
Should dividend hunters look to Europe for quality income

Dividend income funds have apparently seen record-breaking levels of investor cash flow their way so far this year. In the scramble for yield, it seems many are convinced that equities offer the least worst option – and if the excellent performances of our dividend GuruModels are anything to go by, they have been proved right. But after a year of rising prices, the very highest yielding UK strategies are coming under pressure while stocks that offer robust yields with the added promise of balance sheet strength are getting harder to find. With only so many homemade rocks to turn over, one solution for income investors seeking more options is to look to the foreign shores of Europe. 

This time last year we began tracking an investing strategy that screens the market for companies offering a strong and relatively safe income stream with the potential to grow over time. It’s a model inspired from work by Andrew Lapthorne and Dylan Grice at Societe Generale’s Global Equity team, who in turn have built on the work of our favourite professor, Joseph Piotroski. While Grice has since departed to put his quant theories into practice as a fund manager in Switzerland, there has been no let up in the SocGen team’s quest for the best possible combination of quality and income. 

A year on from introducing their Global Quality Income index, they recently reviewed the dividend landscape and came up with one or two surprising findings. Not least among them, in a climate where quality yielders have been sold off recently by profit-taking investors, are findings that Europe could be a honey pot for income seekers. 

Rolling our own QI Screen 

On Stockopedia, the Quality Income screen has been a huge success, outperforming the FTSE 100 by 23.2% over one year with an impressive 33.5% return (dividends excluded). Unlike less sophisticated income screens such as the Dogs of  the Dow, QI shuns the very highest yielding stocks in favour of those in the more sustainable top eighth or ninth quintile. It does however have a minimum threshold of a 4% yield. Financial credibility is essential, meaning each stock must score at least a 7 against Joseph Piotroski’s nine-point F-Score of balance sheet strength and a failure to pass the Altman Z-Score of bankruptcy risk means instant rejection. The screen isn't an exact replica of…

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Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>


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freenet AG is a Germany-based network-independent telecommunications provider. The Company's main activities are divided into two segments: The Mobile Communications segment and Other. The Mobile Communications segment offers a product portfolio of voice and data services for the mobile communication operators T-mobile, Vodaphone, E-plus and O2, as well as buying mobile communications services from the network operators and selling them to its end customers. The sale of mobile communications devices and rendering of sales services are included in this portfolio. The Other segment focuses on development of communication solution, Enhanced Digital Printing (EDP) services and information technology (IT) solutions, as well as rendering of portal services such as e-commerce, advertising and online shopping. more »

GER Price
€18.53
Change
-1.1%
Mkt Cap (£m)
2,084
P/E (fwd)
10.1
Yield (fwd)
9.1

Wallenius Wilhelmsen ASA, formerly Wallenius Wilhelmsen Logistics ASA, is a Norway-based shipping company. It is engaged in roll-on/roll-off (ro-ro) shipping and vehicle logistics, transporting cars, trucks, rolling equipment and breakbulk worldwide. The Company’s activities are divided into two reporting segments: Ocean and Landbased. The Ocean segment transports cars and ro-ro cargoes and comprises of a fleet of more than 100 vessels. The Landbased segment provides terminal and inland logistics solutions and operates over 10 terminals in more than 15 countries. Wallenius Wilhelmsen ASA operates as a holding company for the Group that consists of Wallenius Wilhelmsen Ocean, Wallenius Wilhelmsen Solutions, EUKOR and ARC. more »

OSL Price
NOK27.75
Change
0.4%
Mkt Cap (£m)
1,042
P/E (fwd)
6.6
Yield (fwd)
5.3

Leroy Seafood Group ASA is a Norway-based company active in the seafood industry. The Company is engaged in the farming, processing, packaging and marketing of seafood. The Company’s operations are divided into three business segments: The Farming segment includes the Company’s activities within production of finfish, mainly Atlantic salmon and trout; The Sales and Distribution segment covers sales, marketing and distribution of the Company’s products; The VAP segment comprises four factories and is involved high-value processing of salmon, trout and other species. The Company is also a supplier of shellfish and fresh pelagic fish to Norwegian and European markets. The Company’s subsidiaries include Leroy Midnor AS, Leroy Aurora AS, Leroy Delico AS, Leroy Vest AS and Leroy Fossen AS, among others. more »

OSL Price
NOK68.44
Change
0.4%
Mkt Cap (£m)
3,621
P/E (fwd)
11.1
Yield (fwd)
3.8



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