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9 Dividend-paying Stocks I’ll Buy In 2019

9 dividend-paying stocks I’ll buy in 2019

Latest update: 11/01/2019
Adjusted priority of stocks to purchase to optimize for new withholding tax laws.

Dividend-paying stocks? As a Belgian? Am I going mad, paying 30% to get cash instead of having it accumulate?

Hear me out. Getting money for doing nothing sounds awesome, right? That’s what I think at least. It gives me a nice feeling knowing I get money deposited on my (investment) account for doing nothing myself1. This is the main reason for getting dividend stocks: seeing my investments provide an income on a monthly basis.

I know myself. If I see no results in any form of payout, I think about how my investments are doing on an almost daily basis. This inevitably results in me doing stupid things like buying or selling my shares at the wrong time, i.e., buy after a rally or sell when it’s bottoming out.

I do have to note that as of this year, I can recuperate the 30% withholding tax of up to € 800 of dividend payouts. In other words, up to € 240 of tax. So at least until I reach € 800 I will buy dividend-paying stocks. This is limited to company stocks. Trackers are excluded. For this reason, I will focus on getting REIT and investment companies though I won’t exclude ETFs completely because especially SPYW also performs very well in general.

The basic premise of FIRE is to save up a sizable nest egg where you can withdraw 4% per year from. To achieve this the simplest rule to follow is to have at least your yearly expenses multiplied by 25. If you reach that amount of cash and have it in a portfolio that returns 6% on average, you are set for early retirement.
This is already straightforward, but for me, I’m missing the feeling of gratification that a dividend payout gives.

My top picks

These are the reasons why I’m looking to get some dividend stocks this year. The following list doesn’t have a numbering because I don’t have a fixed order in which I want or will buy them. My focus will be on Belgian companies due to the new Belgian withholding tax law that exempts Belgian or foreign company dividends up to € 800.

SPYW - SPDR S&P Euro Dividend Aristocrats UCITS ETF

SPYW is very strong dividend ETF and would be my first dividend paying stock purchase if weren’t for the fact that trackers are excluded from the tax benefit. Morningstar Analysis gave it a bronze analyst rating. In the analyst report, we can read they believe it’s a competitively priced income ETF with a solid track record will continue beating its Morningstar Category peers over the long term.

SPDR S&P Euro Dividend Aristocrats represents a portfolio of 40 high-yielding eurozone companies that have raised or maintained their dividends for a period of at least 10 years. Holdings are then weighted by dividend yield. While there is a lack of profitability and solvency screens ensuring the sustainability of the dividend payments going forward, we view positively the diversification mechanisms put in place. Constituent and sector weightings are capped at 5% and 30%, respectively.

It also has a decent running cost of 0.30%, which is lower than it’s direct competitor IDVY who sits at 0.40%. SPYW only pays out half-yearly which is good since it limits the withholding tax of 30% I have to pay.

There really isn’t a whole lot to fault this fund and with the recent sell-off, now would be the perfect opportunity to buy some shares.

AED - Aedifica

Aedifica is a Real Estate Investment Trust (REIT) or in Belgian legislation terms, a Geregelementeerd VastgoedVenootschap (GVV). Thanks to this they have to adhere to certain regulations when it comes to structure and dividend payment.

  • Accounting: a REIT may not invest more than 20% of its consolidated assets in the real estate that forms a single real estate entity.
  • Appreciation: real estate is valued quarterly at fair value by a valuation expert; it is recorded in the balance sheet at this valuation. The buildings are not depreciated.
  • Results: at least 80% of the profit must be turned over to the shareholders.
  • Specifically for Aedifica in terms of taxes: the withholding tax on dividends is 15%.

The main benefit of AED is that it focusses on healthcare real estate. With an evergrowing elder population, more retirement homes are needed. There is a risk in the future that there might come an oversupply but it’s not so easy to build new homes. Maybe the biggest concern is the surplus on the intrinsic value, this is a hefty 42% and the dividend yield is a bit lower than normal for REITs at 3.30% but as mentioned earlier the taxes on it are only half.

Just like WDP further down in the list, I’ll start out small at first and add on every dip.

WDP - Warehouse De Pauw

Warehouse De Pauw is, like Aedifica, a  REIT and has the same rules and regulations applied to it. Of course, the way they handle their estate is different as WDP focuses on the industrial warehouse market.
However, thanks to these regulations this REIT is a very good dividend payer at a solid 4.2%. The biggest downside this stock has at the moment is the premium you pay. While it currently dropped a bit, WDP sits -7,58% below it’s high of 2018, at this high it was 54% above intrinsic value (the buildings they own), the so-called EPRA-value.

There really isn’t much to fault WDP except for its high cost to purchase. I’ll probably enter a smaller first position soon and see how it goes from there.

GIMB - Gimv

Gimv is a Belgian investment company with experience in private equity and venture capital. The company was founded on February 25, 1980, by The Flemish government at the time, and is lead by CEO Koen Dejonckheere. It’s main four investment platforms are: Connected Consumer, Health & Care, Smart Industries and Sustainable Cities.

Gimv is listed on Euronext Brussels and manages around 1.6 billion EUR invested in about 50 portfolio companies. Gimv is a major player in the Belgian and northwest European eco-system. The additional benefit is that the majority of these 50-ish companies are unlisted. By getting Gimv I’m able to invest in companies I normally can’t invest in.

The company is my top pick because the gross yield is a healthy (estimated) 4.88% for 2019. On top of that, the P/E ratio is decent at 11.00. It also retraced 19.79% from its most recent top of 56.48 EUR this makes that it can be bought 4.7% below it’s intrinsic value.

Source: https://en.wikipedia.org/wiki/Gimv

IPRP - iShares European Property Yield UCITS ETF

The IPRP tracker provides exposure to continental European REITs. Despite the word “European” in its name, the fund excludes UK listed equities. Though this will actually be correct very soon (normally as of 29/03/2019).
While the exclusion of UK holdings means that fund performance may deviate from other similar trackers (i.e., XDER). Morningstar awarded this fund an analyst rating of bronze.
I might consider the alternative that also invests in the UK given it’s lower expense ratio. Their performance is almost equal.

SOLB - Solvay

Just like Gimv or WDP, Solvay is another Belgian company. They are a chemical company founded in 1863, with its head office in Neder-Over-Heembeek, Brussels.

Dividend yield: ~3.10%

VHYL - Vanguard FTSE All-World High Dividend Yield UCITS ETF

VHYL is a fund that seeks to track the performance of the FTSE All-World High Dividend Yield Index, an index of common stocks of companies, excluding real estate trusts, in developed and emerging markets that pay dividends that are generally higher than average.
With an expense ratio of 0,29%, it’s a cheap tracker which puts it higher on my to purchase list.

Dividend yield: ~4%

LEAS - Leasinvest Real Estate

Another GVV! Makes sense I guess since they offer a nice dividend yield. Lease Invest sits at a solid 5.80% and like most Belgian companies pay it in May.

Dividend yield: ~5.8%

UPVLD - UBS (Irl) ETF plc - Factor MSCI USA Prime Value UCITS ETF (USD) A-dis

UPVLD is one of the lower priority purchases that I have planned due to various reasons:

  • Short track-record: it’s only been around since August 2015.
  • Small fund size: at 18 million it’s not very big and thus might face liquidation in the (near) future.
  • Small dividend yield: Its most recent dividend was 0.22 USD which at current valuation is just 1.17%.

It does offer some diversification in my dividend portfolio because it mainly invests in US large and mid-cap stocks which are contained in the MSCI USA Prime Value index. Its expense ratio is also low at just 0.25%.

Dividend yield: ~1.17%

1 Yes, I know it’s not completely correct stating I didn’t do anything myself. I earned the money doing an IT-job and then bought a stock with said money. I mean, not doing anything to get the dividend.

With the above selection, I will have a good dividend payment schedule throughout the year and I’m diversified though with a more pronounced weight for Belgium due to the REITs and the investment stocks. These stocks, in turn, do invest outside of Belgium, so it’s still diversified.

There is some overlap between the ETF’s and the individual stocks as you can see in the following image (made using Morningstar  X-ray). The table reads as follows:

Name – Weight in position (%) – Weight in portfolio (%) – Country – Portfolio date

(more text after the image)

Table with an overview of the Position-overlap present in my selection of dividend stock picks
Since the ETFs cover Europe it's only normal that the Belgian REITs and investment companies are part of them and thus create an overlap.

The next steps

With my selection in place, I still need to consider what to buy first and for how many. Since I aim to get 200 EUR in dividends this year I want to get the highest paying ones first that are also eligible for the tax reduction.
When it comes to how much to invest in them that’ll be more tricky. I plan to deposit (at least) 12,500 EUR, but how much of that amount is for the dividend stocks, is hard to say since I also want to increase my accumulating ETF positions. It’ll probably look something like this:

  1. GIMB (~ €750)
  2. AED (~ €1,500)
  3. WDP (~ €750)
  4. SOLB (~ €750)

I think this should be a good basis to start from. We’ll see how 2019 progresses of course but I’d like to start with getting the aforementioned 4 dividend stocks first.

do you have any favorite dividend-paying stocks? If so, please let me know, or if not, why? You don’t face my (psychological) issue 😉 ?

This Post Has 6 Comments
  1. I don’t face you psychological issue. Whether I increase from 1,000 to 1,030 euros with my ETF, or stay at 1,000 ETF and receive 30 euros in cash I really don’t mind.
    Here in The Netherlands it doesn’t matter whether you make money by capital gains or by dividends. But for you it seems that dividend paying stocks are super expensive! They eat into 30% of your profits! That means a regular portfolio returning 6% (as you are referring to) actually only yields you a net 4.2%…

    Can you find another trick to get your mind off of the dividends? It seems very expensive to you. Run the calculation yourself, compounded interest over 30-40 years with 4% vs 6%.

    1. Really, I thought the Netherlands had withholding tax as well? I remember there were talks to remove that tax but in the end, Mark Rutte wasn’t able to pull through.
      Though I forgot to mention, I just added in the post, as of this year you can actually recuperate € 240 of dividend tax through your tax return (so 30% of € 800 worth of dividend).

      To clarify, I’m not only going for dividend stocks. I will still have accumulating ETFs.

  2. I’m a bit confused. You talk about the tax changes on the withholding tax (recuperating the dividends up to a certain amount) but then proceed to buy mostly stocks that are not eligible for this withholding tax. I totally agree with the psychological impact though, it is one of the main reasons I’m sometimes tempted to buy dividend stocks too. However, because we can’t recuperate on funds, trackers, REIT ETFs,… or pretty much anything that isn’t an individual stock, it loses its edge for me.

    Are you changing your approach as a whole and was the withholding tax the tipping point, or are you perhaps unaware of the limitations of the dividend recuperation? Didn’t see it mentioned here so I’m just writing it to make sure you know it exists — doesn’t hurt to say it :).

    1. Oh, you are right! I completely forgot about this! I remembered the amounts for this year but had lost track of the fact that it was only for actually stocks (such as GIMB) and not trackers.
      Thanks for commenting and pointing it out. I will update my post to reflect this reality and how I will change my approach. Thanks again Jo!

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