European stock markets should benefit from a wave of dividend increases in 2013, Deutsche Bank strategists write in a research note, adding that they expect “cyclical” stocks - ones seen as the most sensitive to the state of the broader economy - to lead from the front.
“We are confident that 2013 will be better. In 2012, only 38 percent of dividend announcements involved dividend increases, a low last reached in 2009. As European growth turns up and the global economy reaccelerates, we believe this rate will rise with cyclicals being willing contributors,” they write.
The Deutsche Bank strategists highlight electronics company Philips and recruitment company Adecco as dividend plays, and add that European banks and insurers, such as Aegon and UK company Prudential , may also boost dividend payouts.
Deutsche also says European telecom companies could start to grow their dividends again.
“It is our view that during 2013, on the back of a recovery in euro area growth, telecom revenues should begin to stabilise and in turn put a brake on the dividend cuts,” they write in their note.
According to data from Thomson Reuters StarMine, the STOXX Europe 600 index has a “SmartEstimate” forecast for dividend yield over the next 12 months of 3.8 percent - giving a better return than the U.S. S&P 500 index , which is forecast to have a 2.3 percent dividend yield over that time.
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