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3 interesting dividend stocks from Europe

Mart Poom
15. 6. 2023
6 min read

We talk about dividend stocks quite often. And most of the time, the choice falls on US stocks. But we don't have to go far for quality companies! Let's take a look at 3 interesting and quality dividend companies from Europe!

Telefonica $TEF+2.2%

Telefonica is a Spanish multinational telecommunications company that provides telecommunications services in Europe, Latin America and Asia. The company is included in the IBEX 35 index, which is Spain's main stock index.

The last few years have been quite wild. In terms of Telefonica's financial results, it saw revenues fall by 11.6% to EUR 43.1 billion and pre-tax profit fall by 34.3% to EUR 4.5 billion in 2020. This was mainly due to the negative effects of the COVID-19 pandemic, which affected the company's business. Despite this, the company plans to continue its dividend policy and offers a relatively high dividend yield.

TEF
$4.57 $0.10 +2.24%

In 2020, the company signed an agreement to sell its business interest in Colombia for USD 1.3 billion as part of its debt reduction efforts. The company also plans to sell business interests in other countries.

One of the company's key plans is to invest in the development of 5G networks, which could help boost the company's revenue in the future. The company also plans to invest in digital services and cloud technologies. However, competition is increasingly emerging in the telecom market, which may affect Telefonica's performance.

The Spanish telecoms market has been facing a decline in revenues for several years, due to the prevalence of low-cost competitors that have gained market share through aggressive pricing policies in both the mobile and fixed sectors. Recent price hikes from big players such as Orange, Masmovil and Vodafone suggest that there is pressure at the premium end of the market. Telefonica's base-wide price increase (TEF), which took place in January 2023, could indicate future market success if this trend continues.

The dividend is currently a fat 7.5, but this is probably not sustainable. However, if the telco continues on its low-capital intensity path, there is less likelihood of a reduction in free cash flow, which in turn means that the dividend may well be maintained.

Telefonica's dividend is by no means predictable, and that is showing now.

Novartis $NVS+1.3%

Novartis AG is a Swiss multinational pharmaceutical company that focuses on the research, development and manufacture of pharmaceuticals and generics. The company operates in the fields of ophthalmology, dermatology, cardiology, neurology and other areas of medicine. Novartis is one of the largest pharmaceutical companies in the world and employs more than 100,000 people.

NVS
$100.64 $1.28 +1.29%

Novartis invests heavily in research and development of new medicines. In 2020, the company invested more than $9 billion in research and development. The company also has an extensive portfolio of drugs, including several flagship drugs such as Gilenya, Cosentyx and Lucentis.

Novartis is also committed to sustainability and supports research and development of medicines for health issues in developing countries. The company offers collaborative programs with non-profit organizations and governments to help improve access to healthcare in these areas.

Like any pharmaceutical company, Novartis faces regulatory and competitive challenges. Pharmaceutical regulation is very strict and can affect the speed of new drug development. Competition in the market is also very strong and can affect the market share and pricing of the company's products.

Large pharmaceutical companies typically have large and diversified operations, allowing them to achieve solid growth through a combination of the benefits of overall market growth and the impact of mergers and acquisitions. Novartis has recently seen strong growth in its operating profit, indicating that it is capable of delivering solid results over the long term.

NVS trades at a reasonable valuation and offers a solid dividend yield. Over the long term, NVS could provide compelling risk-adjusted returns, but after the stock's recent surge, it may be worth waiting for a better buying opportunity. Overall, NVS has solid growth prospects and could deliver good returns over the long term.

Shell $SHEL+0.2%

Royal Dutch Shell, also known as Shell, is an international energy company based in the Netherlands. It is one of the world's largest oil and gas exploration and production companies, and offers a wide range of products and services in the energy sector.

SHEL

Shell

SHEL
$71.57 $0.12 +0.17%

Royal Dutch Shell was formed in 1907 by the merger of the Royal Dutch Petroleum Company and the Shell Transport and Trading Company. Since then, the company has grown to become one of the largest players in the energy industry, with significant market shares in the upstream oil, gas and petrochemical markets.

Shell is one of the largest companies in the world, with a market capitalization in the billions of dollars. Its revenues come mainly from the sale of oil and gas, but also from petrochemicals, renewable energy and other energy services.

SHEL's dividend is also quite wild

In recent years, the company has been affected by fluctuations in oil and gas prices, which has impacted its financial results. Despite these challenges, the company has been able to maintain its competitiveness and achieve steady financial growth.

Shell is one of the "supermajor" companies in the energy industry, being one of the largest and most powerful players in the market. Shell's main competitors include ExxonMobil, BP, Chevron and TotalEnergies. Compared to these competitors, Shell has a strong position in oil and gas production, as well as in the petrochemical and LNG sectors.

Shell faces several challenges that may affect its future.

Thetransition to green energy: Shell, like other energy companies, faces pressure to transition to more sustainable and cleaner energy sources. The company is investing in renewable energy sources, such as wind and solar power, and in technologies that reduce greenhouse gas emissions, such as carbon storage. However, this may require significant investment and a reorganisation of its portfolio.

Regulation and political uncertainty: The energy industry is often subject to political and regulatory changes that can affect a company's business. Shell must be prepared for such changes and adapt to new requirements and constraints.

Oil and gas price fluctuations: Oil and gas prices are volatile and can change significantly due to global events, political changes and economic factors. Shell must be able to effectively manage the risks associated with these price fluctuations and adapt its strategy to these changing market conditions.

Technological developments: the energy industry is experiencing rapid technological advances, particularly in renewable energy and energy efficiency. Shell must be able to innovate and adapt to these new technologies to remain competitive and maintain its market position.

Competition from new players: The development of new technologies and energy sources is attracting more and more new players into the market, increasing competition for companies like Shell. The company must be able to compete with these new players and maintain its market share.

Disclaimer: This is in no way an investment recommendation. This is purely my summary and analysis based on data from the internet and other sources. Investing in the financial markets is risky and everyone should invest based on their own decisions. I am just an amateur sharing my opinions.

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