We recently compiled a list of the 10 Best European Dividend Stocks To Buy. In this article, we are going to take a look at where Shell plc (NYSE:SHEL) stands against the other European dividend stocks.
Dividend payouts for MSCI Europe companies hit a record €407 billion in 2023, and they are set to grow even more in 2024, with an expected increase to €433 billion, up about 6.5%. According to Allianz Global Investors, the total dividend payout is expected to reach €460 billion by 2025, marking a 13% rise from 2023. The dividend yield is also climbing. It stood at 3.47% at the end of 2023 and could go up to 3.67% in 2024. This is still well above the yield on long-term German government bonds, even after bond yields shot up in 2022. German companies in the MSCI index paid out a 3.3% dividend in 2023, with a projected rise to 3.53% in 2024. Meanwhile, companies from Norway, though still at the top, are expected to see a slight decline in their yield, from 7.2% in 2023 to 6.4% in 2024.
Dividends have had a huge impact on overall equity performance in Europe. Over the last 40 years, about 36% of MSCI Europe’s total return has come from dividends. From 2019 to 2023, dividends made up almost half of the overall return, and from 2014 to 2018, they were responsible for most of it. On top of that, dividend-paying companies tend to have less volatile stock prices compared to those that don’t pay dividends.
Also Read: 10 Dividend Stocks For Steady Income and 10 Best Bank Stocks With High Dividends.
Global dividends hit a record $1.66 trillion in 2023, and they’re expected to reach $1.72 trillion in 2024, according to Janus Henderson. Dividend growth in 2023 was up 5%, with a 7.2% rise in Q4 alone. Banks were a major driver of this growth, delivering record payouts and benefiting from higher interest rates that boosted their margins. Although miners slowed down the overall growth, other industries like vehicles, utilities, software, food, and engineering showed strong performance, highlighting the value of having a diversified portfolio. Twenty-two countries saw record dividend payouts, with Europe (excluding the UK) and Japan playing a key role. The UK saw a 5.4% rise in dividends, and France, Germany, and Italy also set new records.
S&P Global Market Intelligence forecasted that Europe’s dividend payouts would hit €474 billion in 2024, which is a slight dip of 0.8% compared to last year. However, excluding special payments, ordinary dividends should rise by 4%, reaching a new high of €463 billion. Banks are leading the charge, making up 15% of the total dividend payouts, followed by capital goods and energy, both at 9%. The materials sector is set to see a 16% decrease in dividends, but it will still contribute about 6%, the same as utilities and food, beverage, and tobacco. The banking, capital goods, and pharmaceutical sectors are likely to see double-digit increases in their dividends, with banking staying strong at the top. On the flip side, the transportation sector might experience a steep 49% drop. That said, factors like geopolitical tensions and stubborn inflation might pose some risks for dividends in 2025.
Our Methodology
For this article, we used the Finviz stock screener to filter out European dividend stocks. We focused on picking stocks with a consistent record of paying dividends, offering dividend growth, and being financially stable to steer clear of yield traps. The list below is ranked in the ascending order of dividend yield as of December 20. We have also mentioned the number of hedge fund holders in each firm, which was sourced from Insider Monkey’s Q3 2024 database.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)
A gas refinery lit up against the night sky, showing the scale of the company’s petrochemical operations.
Shell plc (NYSE:SHEL)
Dividend Yield as of December 20: 4.54%
Number of Hedge Fund Holders: 48
Shell plc (NYSE:SHEL) is a global energy and petrochemical company operating across Europe, Asia, Oceania, Africa, the Americas, and the United States. Shell is advancing its energy strategy, with projects like Mero-3 in Brazil starting up and the divestment of Shell Pakistan to improve its portfolio. Nigeria has also approved a $1.3 billion deal allowing Renaissance Africa Energy, backed by local companies, to purchase Shell’s onshore oil assets in the country. The sale aligns with Shell’s long-term goal of exiting operations in the Niger Delta region.
Shell plc (NYSE:SHEL) remains focused on LNG and low-carbon oil, adapting to shifting demand in the marine sector. Shell plc (NYSE:SHEL) is also emphasizing operational efficiency and resilience, with Q4 cash flow impacted by the Pearl GTL turnaround but overall confident in its financial strength.
Shell’s LNG business is a key growth area, with projects like LNG Canada and Qatar LNG. The company is also seeing improved performance in marketing, generating higher earnings with the same crude prices. Capital investment for 2024 is expected to be between $22 billion and $25 billion, with a focus on high returns and flexibility. On the environmental front, Shell has made significant progress in reducing emissions, achieving a 70% reduction in methane emissions and 90% in routine flaring since 2016. The company is on track to meet its ambitious Scope 1 and 2 emissions reduction targets by 2030 and is committed to reducing Scope 3 emissions as well. Shell remains dedicated to creating more value with fewer emissions and will continue to prioritize sustainability in its strategy.
Shell plc (NYSE:SHEL) announced a quarterly dividend of $0.344 per share, and $0.688 per American Depositary Share (ADS), which was distributed on December 19. Shell plans to increase its annual dividend by approximately 4%, subject to board approval and aims to distribute 30-40% of its cash flow to shareholders through dividends and share buybacks.
Insider Monkey’s database suggests that 48 hedge funds held long positions in Shell plc (NYSE:SHEL), compared to 49 in the last quarter. Boykin Curry’s Eagle Capital Management is a prominent stakeholder in the company, with shares worth almost $997.5 million.
Overall SHEL ranks 3rd on our list of the best European dividend stocks to buy. While we acknowledge the potential of SHEL as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SHEL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.