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.