The consumer price index data showed this week that the rampant inflation that was in place a year ago is slowing, after peaking at 9.1% year-over-year in June of 2022. The readings for March came in below expectations, as the year-over-year figure slipped to 5.0%. This means there is a chance that, if the Federal Reserve raises rates in early May, it may be the end of the rate hike cycle with the terminal or end rate at 5.00% to 5.25%.
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With the interest rate dilemma close to being settled, for growth and income investors, adding top-quality dividend stocks based in Europe to domestic portfolios may be a solid way to go for the rest of the year and into 2024.

Often when income investors look for companies paying big dividends, they are drawn to the Dividend Aristocrats, a group of stocks we have written about frequently. We were intrigued by the top European Dividend Aristocrats, which have a set of rules for entry that vary from their American counterparts:

• They are an S&P Europe 350 Index member.
• They have 10 consecutive years of increasing dividends.
• They possess a float-adjusted market capitalization of at least US$3 billion.
• Their median daily trading volume is at least US$5 million.

Ten years is far less than the 25 required by companies in the S&P 500. Typically this is because European companies do not value the dividend in the same manner as American companies. In fact, European companies tend to have a more conservative approach to rewarding shareholders with dividends.

We screened the top 30 European Dividend Aristocrats looking for the most liquid and well-known names for investors who are looking for income and a degree of diversification away from the American indexes. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Diageo

This is one of the largest producers of alcoholic beverages in the world. Diageo PLC (NYSE: DEO) produces, markets and sells alcoholic beverages worldwide, including scotch whiskey, gin, vodka, rum, beer, Irish cream liqueurs, wine, Raki, tequila, Canadian and American whiskey, Cachaça and brandy, as well as adult beverages and ready to drink products. The company’s premium brands include Johnnie Walker, Smirnoff, Captain Morgan, Baileys, Tanqueray and Guinness.

Its reserve brands include Johnnie Walker Blue Label, Johnnie Walker Green Label, Johnnie Walker Gold Label 18-year-old, Johnnie Walker Gold Label Reserve, Johnnie Walker Platinum Label 18-year-old, John Walker & Sons Collection, Johnnie Walker The Gold Route, Johnnie Walker The Royal Route and other Johnnie Walker super-premium brands, as well as The Singleton, Cardhu, Talisker, Lagavulin and other malt brands.

Shareholders receive a 1.96% dividend. BofA Securities has a $203 price target on Diageo stock. The consensus target is $200.17, and the final trade for Wednesday was reported at $185.42.

This is among the world’s largest pharmaceutical drug makers by sales and remains a top international pick across Wall Street. Novartis AG (NYSE: NVS) researches, develops, manufactures and markets health care products in Switzerland and internationally. The company operates through two segments.
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The Innovative Medicines segment offers prescription medicines for patients and physicians. It also provides cardiovascular, ophthalmology, neuroscience, immunology, hematology and solid tumor products.

The Sandoz segment develops, manufactures and markets finished dosage forms of small molecule pharmaceuticals to third parties. It also provides protein-based or other biotechnology-based products, including biosimilars, as well as biotechnology manufacturing services and anti-infectives, such as active pharmaceutical ingredients and intermediates primarily antibiotics. Novartis has a license and collaboration agreement with Alnylam Pharmaceuticals to develop, manufacture and commercialize inclisiran, a therapy to reduce LDL cholesterol.

Novartis stock investors receive a 3.66% dividend. The BofA Securities price target of $113.50 compares with a $107.13 consensus target and Wednesday’s closing print of $96.47.

Sanofi

This is another top pharmaceutical company in Europe trading at very reasonable levels. Sanofi S.A. (NYSE: SNY) engages in the research, development, manufacture and marketing of therapeutic solutions in the United States, Europe and elsewhere.

Sanofi provides specialty care products, including human monoclonal antibodies; products for multiple sclerosis, neurology, other inflammatory diseases, immunology, rare diseases, oncology and rare blood disorders; medicines for diabetes; and cardiovascular and established prescription products. It also supplies poliomyelitis, pertussis and Hib pediatric vaccines, as well as influenza, adult booster, meningitis and travel and endemic vaccines.

In addition, Sanofi offers allergy, cough and cold, pain, digestive and nutritional products. Other products included daily body lotions, anti-itch products, moisturizing and soothing lotions, and body and foot creams, as well as powders for eczema. It also has various pharmaceutical products and vaccines in the development stage.

Investors receive a 3.46% dividend. The BofA Securities price target is $65, and Sanofi stock has a consensus target of $63.59. Shares closed on Wednesday at $55.80.

SAP

This is a top way to invest in the booming software segment. SAP S.E. (NYSE: SAP) provides enterprise application software products worldwide.

The company’s SAP S/4HANA offers software capabilities for finance, risk and project management, procurement, manufacturing, supply chain and asset management, and research and development. SAP SuccessFactors offers solutions for human resources, including HR and payroll, talent and employee experience management, and people and workforce analytics. Its spend management solutions cover direct and indirect spend, travel and expense and external workforce management.
The company also provides SAP customer experience solutions; SAP Business Technology platform, which enables customers and partners to build, integrate and extend applications in a cloud-native way; and SAP Business Network, which enables companies to collaborate with trading partners for supply chain visibility.
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In addition, SAP Signavio helps customers to scan their operations to understand and improve their business process landscape. SAP’s industry cloud solutions provide modular solutions addressing industry-specific functions and sustainability-related solutions.

The dividend yield here is 1.72%. Sanford Bernstein has set its target price at $154. The consensus target is $143.06, and SAP stock closed at $127.11 on Wednesday.

TotalEnergies

This French integrated giant is a great way to play an energy rally from the European side. TotalEnergies S.E. (NYSE: TTE) operates as an integrated oil and gas company worldwide. Its Exploration & Production segment engages in oil and natural gas exploration and production activities in approximately 50 countries.

The Integrated Gas, Renewables & Power segment engages in the LNG production, shipping, trading and regasification activities; trading of liquefied petroleum gas (LPG), petcoke and sulfur, natural gas and electricity; transportation of natural gas; electricity production from natural gas, wind, solar, hydroelectric and biogas sources; energy storage activities; and development and operation of biomethane production units, as well as provides energy efficiency services.

The Refining & Chemicals segment refines petrochemicals, including olefins and aromatics; and polymer derivatives, such as polyethylene, polypropylene, polystyrene and hydrocarbon resins, as well as biomass conversion and elastomer processing. This segment also engages in trading and shipping crude oil and petroleum products.

The Marketing & Services segment produces and sells lubricants; supplies and markets petroleum products, including bulk fuel, aviation and marine fuel, special fluids, compressed natural gas, LPG and bitumen; and provides fuel payment solutions. It operates approximately 15,500 service stations.

Though finding comprehensive final quarterly earnings is challenging, the company still pays the highest dividend of all of the mega-cap integrated leaders.

TotalEnergies stock comes with a 4.49% dividend. The $84 BofA Securities price target is well above the $73.72 consensus target and the most recent close at $64.06.

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These five top European stocks trade on American exchanges, have liquidity and pay very dependable dividends. One caveat for U.S. investors is that many foreign governments automatically withhold taxes on dividends paid by companies incorporated within their borders. This may mean that a certain percentage of your dividend will be withheld by your broker.

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