How do I invest in European dividend stocks?

An investment in high-dividend-yielding stocks is a solid investment. Dividends are usually paid by profitable and established companies. For investors seeking regular income in times of low interest rates, dividend stocks can provide attractive yields.

There are several indices available to invest with ETFs in European high-dividend equities. This Investment Guide for European dividend stocks will help you to differentiate between the most important indices and to select the best ETFs tracking indices on European dividend stocks.

The best European dividend ETF by 1-year fund return as of 31/10/2024

All European dividend ETFs ranked by fund return

The largest European dividend ETF by fund size in GBP

All European dividend ETFs ranked by fund size

The cheapest European dividend ETF by total expense ratio

All European dividend ETFs ranked by total expense ratio

Methodologies of the compared indices

Source: justETF Research; as of 28/02/22

EURO STOXX® Select Dividend 30 index

The EURO STOXX® Select Dividend 30 index consists of a selection of 30 companies from the Eurozone that meet criteria for high dividend quality. The parent index is the EURO STOXX® index. Securities are selected based on their indicated dividend yield and their historical dividend policy. The selected stocks are weighted by their indicated dividend yield.

Methodology of the EURO STOXX® Select Dividend 30 Factsheet Methodology

• 30 dividend stocks from Eurozone countries
• Investment universe: EURO STOXX® index, which includes appr. 300 companies
• Stock selection is based on the indicated dividend yield. In addition, companies must meet certain requirements with respect to dividend quality and payout ratio
• Selection criteria: positive dividend growth over five years, dividend payments in four of the last five years, non-negative payout ratio (max. 60%)
• Index rebalancing takes place annually in March
• Index weighted by indicated dividend yield

MSCI EMU High Dividend Yield index

The MSCI EMU High Dividend Yield index focuses on the highest dividend stocks in the Eurozone. This dividend index includes 38 companies (as of 30/09/2024) which are selected according to quality factors and dividend strength. The criteria include a dividend yield of at least 30 percent above the average of the underlying index (MSCI EMU index) and a non-negative dividend growth rate over the last 5 years. The selected stocks are weighted by their free float market capitalization.

Methodology of the MSCI EMU High Dividend Yield Factsheet Methodology

• 38 dividend stocks from Eurozone countries (as of 30/09/2024)
• Investment universe: MSCI EMU index, which includes 221 shares (as of 30/09/2024), excluding REITs
• Stock selection is based on the indicated dividend yield
• Selection criteria: quality factors, dividend yield of at least 30% above the average of the underlying index, non-negative dividend growth over 5 years
• Index rebalancing takes place semi-annually in May and November
• Index weighted by free float market capitalization
• Maximum weight per individual stock is 5%

MSCI Europe High Dividend Yield index

The MSCI Europe High Dividend Yield index focuses on the highest dividend stocks from Europe. This dividend index includes 72 companies (as of 30/09/2024) which are selected according to quality factors and dividend strength. The criteria include a dividend yield of at least 30 percent above the average of the underlying index (MSCI Europe index) and a non-negative dividend growth rate over the last 5 years. The selected stocks are weighted by their free float market capitalization.

Methodology of the MSCI Europe High Dividend Yield Factsheet Methodology

• 72 dividend stocks from 15 European countries (as of 30/09/2024)
• Investment universe: MSCI Europe index, which comprises 415 European equities (as of 30/09/2024), excluding REITs
• Stock selection is based on the indicated dividend yield
• Selection criteria: quality factors, dividend yield of at least 30% above the average of the underlying index, non-negative dividend growth over 5 years
• Index rebalancing takes place semi-annually in May and November
• Index weighted by free float market capitalization
• Maximum weight per individual stock is 5%

S&P Euro High Yield Dividend Aristocrats index

The S&P Euro High Yield Dividend Aristocrats index focuses on long-term and stable dividend growth. It is based on the S&P Europe Broad Market Index (BMI), but only includes stocks from Eurozone countries. A company is only included in the S&P Euro High Yield Dividend Aristocrats index if it has at least 10 consecutive years of a controlled dividend policy with rising or stable dividend payments. In addition, pre-defined yield criteria must be met. Despite the strict inclusion rules, the limits for individual securities, sector and country weightings ensure that no cluster risks arise in the index. The selected stocks are weighted by their indicated dividend yield.

Methodology of the S&P Euro High Yield Dividend Aristocrats Factsheet Methodology

• Appr. 40 dividend stocks from Eurozone countries
• Investment universe: S&P Europe Broad Market Index (BMI), which includes 1,816 European stocks (as of 28/02/22). Only Eurozone companies are included
• Stock selection is based on the indicated and the historical dividend yield
• Selection criteria: controlled dividend policy with rising or stable dividends for at least 10 consecutive years
• Index rebalancing takes place quarterly, reviews take place monthly
• Index weighted by indicated dividend yield
• Weight per individual stocks max. 5%; weight per sector/country max. 30%

STOXX® Europe Select Dividend 30 index

The STOXX® Europe Select Dividend 30 index comprises a selection of 30 companies from Europe that meet criteria for high dividend quality. The parent index is the STOXX® Europe 600 index. Securities are selected based on their indicated dividend yield and their historical dividend policy. The selected stocks are weighted by their indicated dividend yield.

Methodology of the STOXX® Europe Select Dividend 30 Factsheet Methodology

• 30 dividend stocks from Europe
• Investment universe: STOXX® Europe 600 index
• Stock selection is based on the indicated dividend yield. In addition, companies must meet certain requirements with respect to dividend quality and payout ratio
• Selection criteria: positive dividend growth over five years, dividend payments in four of the last five years, non-negative payout ratio (max. 60%)
• Index rebalancing takes place annually in March
• Index weighted by indicated dividend yield

When choosing a European dividend ETF one should consider several other factors in addition to the methodology of the underlying index and performance of an ETF. For better comparison, you will find a list of all European dividend ETFs with details on size, cost, age, income, domicile and replication method ranked by fund size.

Compare all European dividend ETFs in detail
Compare all European dividend ETFs in a chart

Source: justETF.com; As of 16/11/2024

Return comparison of all European dividend ETFs

The table shows the returns of all European dividend ETFs in comparison. All return figures are including dividends as of month end. Besides the return the reference date on which you conduct the comparison is important. In order to find the best ETFs, you can also perform a chart comparison.

• Cumulative
• Calendar year

Source: justETF.com; As of 31/10/2024; Calculations in GBP including dividends