Five European Dividend Growers with Special Payouts: Unlocking Extra Returns
Discover European Stocks Offering Regular Dividends and Special Payouts
Europe, in comparison to the United States, has a relatively small number of true Dividend Aristocrats—stocks that have increased their dividend payouts for at least 25 consecutive years. According to the Dividend Hike Database, which has been tracking dividend increases for companies worldwide since 2002, there are currently only 20 such stocks in Europe. Many of these companies increase their dividends only slightly each year, with Swiss consumer giant Nestlé as the best example.
However, European Dividend Aristocrats are noteworthy for another reason: they increasingly offer special dividends in addition to their regular dividend payouts. Special dividends provide an opportunity for investors to receive additional returns, often resulting in a very high overall dividend yield for certain stocks. These special dividends are frequently issued as a way to return excess cash to shareholders. Widely held names such als Norsk Hydro, TotalEnergies, Shell, Unilever and KPN are known for their attractive dividend yields combined with additional payments over the last couple of years. We will dive much deeper, with some real dividend growers from Europe with recent special dividend payments on top of the growing dividend or special dividends combined with a very high dividend yield.
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In this post, we'll explore five European stocks that not only provide a growing dividend but have also announced special dividends in recent years or this year. These companies often use special dividends to distribute surplus cash to investors, making them intriguing options for dividend-seeking investors.
Five European dividend growers with special dividends
1. Orkla (Norway)
What They Do: Orkla is a leading consumer goods company in Norway, focusing on branded consumer products in food, beverages, and personal care. They operate in several segments including branded consumer goods, investments, and real estate. The biggest shareholder in Orkla is Norwegian businessman and billionaire Stein Erik Hagen with a 20% stake through his investment vehicle Canica AS.
Moat: Orkla has a moderate competitive moat due to its strong brand portfolio and extensive distribution network. Its well-established brands and significant market share in the Nordic region provide a certain degree of competitive advantage.
Dividend: Orkla is known for its long history of steady/higher dividends without a cut for decades. The company from Norway last raised its regular dividend in 2022 with a 9.1% hike to NOK 3.00 per share. This year (2024) Orkla paid a special dividend of NOK 3.00 per share together with a NOK 3.00 per share regular dividend. The current dividend yield for Orkla is 3.3% at a stock price of NOK 88.15 (6.6% if the special dividend is included). Orkla also paid a special dividend of NOK 5.00 per share in 2017. Expect gradual dividend hikes down the road for Orkla, combined with more special dividend payments in the next couple of decades.
Fundamentals: Orkla has an estimated p/e of 13.8 for 2024 with a ROIC of 8.7% for 2023 and an EBIT-margin of 10.2%. The current market cap is NOK 88.3 billion ($8 billion). Orkla has reported higher revenues every year since at least 2020 and is expected to grow its total sales by 2.6% to a new record of almost NOK 70 billion this year. Together with the dividend, the company’s strong free cash flow is used for acquisitions with Orkla announcing multiple deals every year including 4 smaller buyouts so far in 2024.
2. BIC (France)
What They Do: BIC is renowned for its stationery products, lighters, and shavers. The company is known for its iconic disposable products like BIC pens, razors, and lighters. The Bich family is the biggest shareholder in BIC with a 47.3% stake.
Moat: Special dividend champ BIC has a significant competitive moat driven by its strong brand recognition and economies of scale. Its well-known products and cost-efficient manufacturing processes help maintain its market position and competitive edge. However BIC has had its issues throughout the years with strong competition and dropping demand for its iconic products such as lighters with less people smoking worldwide.
Dividend: BIC was known for its growing dividend for decades but had to announce back to back dividend cuts for both FY 2019 and 2020. Since then the company known for its high dividend yield hiked the dividend three times: +19.4% in 2022, +19.1% in 2023 and +11.3% this year to €2.85 per share. On top of that, BIC has announced a €1.42 per share special dividend with ex-date September 16, 2024. The dividend yield for BIC stands at 7.4% based on a stock price of €56.70 and a total dividend payment of €4.27 per share this year. BIC also paid large special dividends in 2016, 2012, 2010 and 2005. The last couple of years the company seems to prefer buying back its own stock over paying special dividends.
Fundamentals: BIC has a relative low valuation with an estimated p/e of just 10 for 2024. The ROIC is 15.3% for 2023 with a 15% EBIT-margin. The market cap for BIC is €2.4 billion. BIC will most likely report a small revenue decline for FY 2024, with growth expected to pick up again in the next couple of years. BIC is debt free with a net cash position of €311 million at the end of 2023.
3. Randstad (Netherlands)
What They Do: Randstad is a global leader in staffing and recruitment services. The company provides temporary and permanent staffing solutions, as well as HR services and consulting.
Moat: Randstad has a moderate moat due to its extensive global network, large client base, and strong industry expertise. Its scale and established reputation in staffing services provide a competitive edge, although the industry is highly competitive and fragmented.
Dividend: Randstad is known for its annual special dividends paid together with a variable regular dividend. For FY 2023 Randstad announced a regular dividend of €2.28 per share combined with a €1.27 per share special dividend. Randstad traditionally pays the regular dividend early April, followed by the special dividend in Q4. The ex-date for the €1.27 per share special dividend is September 26, 2024. The total dividend yield for 2024 is a whopping 8.5%. Randstad also paid special dividends in 2022 and 2021. This year’s regular dividend of €2.28 per share is the second highest ever paid in the company’s history.
Fundamentals: Randstad has an estimated p/e of 13.4 at a stock price of €41.70. The ROIC was 15.6% in 2023 with an EBIT-margin of 4.1%. The cyclical stock is down 26.5% in 2024 resulting in a current market cap of €7.5 billion. Analysts expect Randstad’s revenue to decline by 4.5% to €24.3 billion in 2024, coming on the back of a 7.8% decline in 2023. However, a return to growth is expected in the next couple of years. At the end of 2023 Randstad had a net debt position of €923 million while generating a free cash flow of €1.07 billion last year. This compares to a dividend payment of €530 million for 2023.
4. FW Thorpe (UK)
What They Do: UK smallcap FW Thorpe (GBP 408 million market cap) specializes in manufacturing and supplying lighting solutions. Their products are used in various sectors, including commercial, industrial, and architectural lighting.
Moat: FW Thorpe has a narrow moat, supported by its specialized product offerings and focus on high-quality, innovative lighting solutions. The company’s reputation and technological expertise contribute to its competitive position, though the lighting industry can be competitive.
Dividend: Of all stocks mentioned in this article FW Thorpe has one of the very best track records with more than 20 consecutive years of increased dividends. For FY 2023 the dividend was hiked by 5% to a record high of 6.46 pence per share. The average annual dividend growth over the last 20 years is impressive with 12.1%. Dividend growth has slowed down a bit in the recent years however. Currently FW Thorpe has a 1.9% yield at a stock price of 348 pence. For investors this is a stock with several bonus dividend payments throughout the years with several smaller special dividends paid in 2022, 2021 and 2016.
Fundamentals: The p/e for FW Thorpe is 20 based on the 2023 earnings per share. The ROIC for 2023 was 16.2% with a 15.6% EBIT-margin. Because of its small size not many analysts follow FW Thorpe stock. Because of this it’s not possible for us to give you a forward p/e or estimates about the future sales growth. All we know is the FW Thorpe has a very strong dividend track record with decades without a dividend cut.
5. Publicis (France)
What They Do: Publicis is a multinational advertising and public relations company. It offers a range of services including digital marketing, media buying, and communication strategies for global clients.
Moat: Publicis possesses a moderate to strong competitive moat due to its large scale, extensive client network, and global reach. Its diverse range of services and strong industry position contribute to its competitive advantage in the advertising and communications sector.
Dividend: Last but not least we had to add Publicis Groupe from France because of its strong history of dividend growth and recent special dividend announcements. For years Publicis had one of the very best dividend track records of all stocks in Europe with almost 40 years without a dividend cut and annual strong dividend hikes. However the company cut its dividend by 45.8% from a record €2.12 per share to €1.15 per share during the covid-pandemic. After this, Publicis starting boosting its dividend again by double digits for 4 consecutive years with a record high payment of €3.19 per share in 2024. On top of this Publicis also announced a €0.21 per share special dividend that was paid out this July together with the regular dividend. Publicis has a dividend yield of 3.7% at a stock price of €88.96. The company also paid special dividends in 2023, 2022 and 2014. For 2025 we expect yet another big dividend hike to more than €3.50 per share for Publicis.
Fundamentals: The estimated p/e for Publicis is 12 for FY 2024 with a 13.3% ROIC realised in 2023 combined with a decent 12.8% EBIT-margin. The current market cap for Publicis is €22.5 billion. Publicis is expected to report a revenue growth of almost 9% for FY 2024 to a new record high of €14.3 billion. On top of this the company is debt free with a net cash position of €1.4 billion at the end of 2023.
Conclusion
While Europe may have fewer Dividend Aristocrats compared to the United States, the presence of special dividends among European stocks offers an appealing alternative for dividend investors. These special payouts, combined with regular dividend increases, provide a way for companies to share their financial successes with shareholders and enhance overall dividend yields.
If you’re considering dividend-paying stocks in Europe, keep an eye out for those that not only maintain a growing regular dividend but also have a track record of issuing special dividends. These companies can offer substantial returns and are worth including in a well-diversified dividend portfolio.
Disclaimer: The information provided here is for informational purposes only and should not be considered financial advice. Investors should conduct their own research or consult with a financial advisor before making any investment decisions.