Market Overview

Excellence In European Dividends

Excellence In European Dividends

Europe exchange traded funds are bouncing back this year, but those funds have disappointed and vexed investors for several years.

One way for investors to wade back into European equities is with dividend strategies.

What Happened

The O'Shares FTSE Europe Quality Dividend ETF (NYSE: OEUR) is one way conservative investors can revisit Europe. OEUR is higher by almost 12 percent this year. While the fund is still slightly in the red over the past 12 months, it's beating the S&P Europe 350 Index by a wide margin over the trailing year.

OEUR follows the FTSE Developed Europe Qual/Vol/Yield 5% Capped Factor Index. That index “is designed to measure the performance of publicly-listed large-capitalization and mid-capitalization dividend-paying issuers in Europe that meet certain market capitalization, liquidity, high quality, low volatility and dividend yield thresholds, as determined by FTSE Russell,” according to O'Shares.

Why It's Important

The quality factor is one of this year's best-performing investment factors and that trait is alive and well in OEUR. OEUR's low volatility and quality requirements help the fund steer clear of stocks that have recently experienced large declines, inflating dividend yields in the process.

For long-term investors, dividends are the way to go with European equities and research confirm as much.

“Over the past 20 years, Europe dividend stocks have outperformed value, growth and the MSCI Europe Index. Additionally, dividends have outperformed value in the 5 and 10 year periods as well,” according to O'Shares research.

OEUR allocates nearly half its geographic weight to the U.K. and Switzerland, two of Europe's steadiest dividend growth markets. The largest Eurozone representation in the fund is France at 15.68 percent. Since coming to market nearly four years ago, OEUR has delivered higher quality, more income and less risk than traditional diversified Europe ETFs.

What's Next

Over the past decade, “adjusting for risk, Consumer Staples and Health Care were among the best performers,” said O'Shares. “Banks were the poorest performer based on risk-adjusted return, relative to the main Europe equity sectors.”

OEUR allocates almost 34 percent of its combined weight to the healthcare and consumer staples sectors and 12 percent to financial services.

Related Links

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Posted-In: Long Ideas Dividends Specialty ETFs Eurozone Top Stories Trading Ideas ETFs Best of Benzinga


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