Investors Avoid European Dividend Stocks

With market volatility showing no signs of abating and continued talk about a flight to quality, are investors seeking a return from the less fashionable companies that pay a healthy dividend rather than investing in stocks trading on racy multiples? We have used Capital IQ to identify the European large caps trading on the most attractive dividend yields and overlayed securities lending data to assess the behavior of institutional investors.

In short, these investors are relatively underweight the top 30 companies ranked by dividend yield when compared to their average holdings in Stoxx 600 Index. Companies of note include: Portugal Telecom Sgps Sa (ELI:PTCA), Lundin Petroleum Ab (STO:LUPE), TDC A/S (CPH:TDC), RWE Ag (ETR:RWE) and Cable & Wireless Worldwide Plc (LON:CW).The average (annual) dividend yield across the Stoxx Euro 600 is 4.2%, up 23% since the market collapsed at the beginning of August, mainly reflecting an average fall of 16% across the Index. Many of the top 30 stocks show exceptionally high dividend yields, a symptom of their dramatic fall from grace with investors.

Source: Data Explorers

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