This article presents an overview of the 5 Best European Dividend Stocks to Buy. For a detailed overview of such stocks, read our article, 11 Best European Dividend Stocks to Buy.
5. Novo Nordisk A/S (NYSE:NVO)
Number of Hedge Fund Investors: 51
Novo Nordisk A/S (NYSE:NVO) kept making headlines this year thanks to its weight loss drug Ozempic. The Denmark-based company Novo Nordisk A/S (NYSE:NVO) was given the title of company of the year by Yahoo Finance. The stock has gained about 41% year to date through December 16.
J.P. Morgan strategists recently said Novo Nordisk A/S (NYSE:NVO) could experience an EPS growth of about 22% in 2024.
Polen Focus Growth Strategy made the following comment about Novo Nordisk A/S (NYSE:NVO) in its Q3 2023 investor letter:
“We added new positions in Eli Lilly and Novo Nordisk A/S (NYSE:NVO) in the third quarter. We have been monitoring Lilly and Novo Nordisk for some time, and new clinical results from a recent drug trial give us confidence in the large upside potential for GLP-1s. These results from a Novo Nordisk study showed impressive cardiovascular outcomes for its GLP-1, Wegovy. This study of over 17,000 overweight or obese people with established cardiovascular disease (but without diabetes) showed that Wegovy reduced the likelihood of major adverse cardiovascular events (heart attack, stroke, sudden cardiac death) by over 20% for up to five years. This large and well-controlled trial helps to demonstrate that the weight loss benefits of GLP-1s (likely similar for Mounjaro and Wegovy) lead to better health outcomes for patients and likely save the healthcare system significant amounts of money over the long term. In our view, this makes it very unlikely that payors and governments will deny patient access and reimbursement for these drugs for the long haul (hence the positive stock price moves for Lilly and Novo when the data was released mid-quarter).
We have started with a small 1% position in Lilly, but when paired with our new holding in Novo Nordisk at 2% (NVO is slightly larger as its valuation is lower), it represents a 3% combined position in the two companies we expect to maintain a duopoly in this large drug class over the next several years.
Novo Nordisk has a long history as the leader in diabetes pharmaceuticals. It is much more narrowly focused on diabetes than Lilly with its GLP-1 drugs, Ozempic and Wegovy (Wegovy is the same drug as Ozempic but uses a different name for obesity), driving most of the company’s revenue and earnings growth. The cardiovascular outcomes trial mentioned above is a big positive for Novo. It establishes the duopoly with Lilly in insulin management for Type 2 diabetics and weight loss for the huge number of overweight and obese people across the globe.
Novo has more legacy diabetes products that its newer drugs will cannibalize, but our research indicates that we can expect high-teens earnings per share growth from Novo over the next five years. In addition, both Novo and Lilly have next-generation diabetes and weight loss drugs in development that appear even more effective than the current offerings while also offering new treatment modalities, such as oral drugs versus today’s auto injectables.”
4. GSK Plc (NYSE:GSK)
Number of Hedge Fund Investors: 52
UK-based pharma giant GSK Plc (NYSE:GSK) has a dividend yield of about 3.8% as of December 16.
A total of 52 hedge funds tracked by Insider Monkey had stakes in GSK Plc (NYSE:GSK) as of the end of September.
Ariel Global Fund made the following comment about GSK plc (NYSE:GSK) in its Q3 2023 investor letter:
“Global pharmaceutical and healthcare company, GSK plc (NYSE:GSK), also advanced in the period following a top- and bottom-line earnings beat and subsequent raise in full-year guidance. Shares were also aided by a successful U.S. and European launch of Arexvy, a respiratory syncytial virus (RSV) vaccine for older adults. Although risks around the Zantac litigation remain a concern, we believe GSK should generate sustainable growth and margin expansion as the company transitions its Pharma pipeline towards specialty medicines and vaccines. Furthermore, the company’s robust balance sheet provides the scope for bolt-ons, which has the potential to drive additional growth.”
3. Accenture Plc (NYSE:ACN)
Number of Hedge Fund Investors: 55
Tech services company Accenture Plc (NYSE:ACN) in September increased its dividend by 15.2%.
A total of 55 hedge funds tracked by Insider Monkey had stakes in Accenture Plc (NYSE:ACN).
ClearBridge Multi Cap Growth Strategy made the following comment about Accenture plc (NYSE:ACN) in its Q2 2023 investor letter:
“While the ClearBridge Multi Cap Growth Strategy has limited mega cap exposure, which has been a recent headwind to relative performance, we own several companies that stand to benefit from the explosive growth in generative AI. These holdings play key roles in building out the necessary infrastructure and helping customers leverage capabilities enabled by this emerging technology
Accenture plc (NYSE:ACN), a business and IT services consultant, will be instrumental in helping enterprises reinvent and modernize their IT architecture for AI. The company recently announced a $3 billion investment, which includes doubling their data and AI workforce to 80,000 to address this growing opportunity.”
2. Eaton Corporation PLC (NYSE:ETN)
Number of Hedge Fund Investors: 55
Ireland-based power management company Eaton Corporation PLC (NYSE:ETN) ranks 2nd in our list of the best European dividend stocks to buy according to hedge funds.
In October Eaton Corporation PLC (NYSE:ETN) posted Q3 results. Adjusted EPS in the period came in at $2.47, beating estimates by $0.13. Revenue jumped about 11.3% year over year to $5.95 billion, beating estimates by $10 million.
Carillon Eagle Mid Cap Growth Fund made the following comment about Eaton Corporation plc (NYSE:ETN) in its Q3 2023 investor letter:
“Eaton Corporation plc (NYSE:ETN) share prices jumped to all-time highs after the company boosted its earnings guidance for the year. Management noted that demand remains strong, which propelled the company’s sales backlog to a record level. Eaton remains well-positioned to capitalize on re-industrialization in North America and Europe.”
1. Linde PLC (NASDAQ:LIN)
Number of Hedge Fund Investors: 71
Chemical company Linde PLC (NASDAQ:LIN) shares were spotted in 71 hedge fund portfolios as of the end of the third quarter of 2023. Linde PLC (NASDAQ:LIN) during its Q3 earnings call said while it’s committed to dividends its main focus is investing in business:
“While our mandate is to maintain an A credit rating and grow the dividend, the priority for our capital is to invest into the business. This follows our time-tested investment criteria, which has enabled Linde to consistently achieve industry-leading ROC year-after-year. After investing into the business, surplus cash is used for share repurchases. Having a strong balance sheet, stable cash generation and an active stock repurchase program enables value-creating opportunities during turbulent markets.
In fact, our best stock repurchases happen when equity markets overreact. This is why we recently announced a new $15 billion stock repurchase program, allowing us to optimize our excess free cash flow and robust balance sheet.”
Read the entire earnings call transcript here.
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