Going Dutch, High Dividend Portfolio from The Netherlands

May 22, 2019    Portfolio Idea The Netherlands

This month, I present you my very first portfolio idea. The goal of these ideas is to inspire you into building your own portfolio.

I will look back at the portfolio in about a year and see how things went. If everything went great, I’ll keep the portfolio and use the formula that I used to create an up-to-date one. If things went south, I may update the rules that created the portfolio and see if I can do better.

And that’s what it is all about: creating a good set of rules that will automatically select stocks for us. No picking of individual stocks and no tracking just the indices.

The Netherlands

For this portfolio, I take a look at my neighbors to the north (I live in Belgium). Over the years, the Dutch government has created an investor and business friendly climate that has been neglected a bit by many international investors.

Dividend Investing

For this portfolio, I will focus on dividend yield and payout ratio.

Dividend investing is a proven investment method that has generally good returns, in many years beating a more general index. Because of the dividend, there is a (somewhat) guaranteed return that you may not have if you just depend on increases in share price.

When dividend investing, the focus is on companies that reliable pay a high dividend. So the typical parameters to look for are

  • Dividend yield: How much dividend is paid yearly compared to the stock price.
  • Payout ratio: How much of the earnings is paid out as dividend. Typically, if this is low, there is room to keep paying the dividend and maybe even grow it in the future. If this is high, the company may not be able to keep paying the dividend in the future.
  • Dividend growth: Ideally, as the company grows and revenue increases, the shareholders should get a growing dividend. Every year, a little bit more.

This Month’s Portfolio

With that in mind, here are the criteria for this month’s selection:

  • A Dutch company
  • Payout ratio < 80%
  • Dividend growth > 0%

Of this list, take the first 10 companies with the highest dividend yield.

Symbol Name Current price Yield Payout Ratio Dividend Growth
ECMPA.AS Eurocommercial Properties N.V. 25.00 EUR 8.15% 68.85% 1.65%
KA.AS KAS Bank NV 12.45 EUR 7.79% 78.58% 0.64%
ABN.AS ABN AMRO Group N.V. 19.22 EUR 7.49% 47.47% 15.38%
URW.AS Unibail-Rodamco-Westfield 141.30 EUR 7.07% 58.50% 2.87%
ASRNL.AS ASR Nederland N.V. 36.16 EUR 6.16% 45.54% 12.42%
KVW.AS Koninklijke VolkerWessels N.V. 16.90 EUR 6.14% 54.00% 30.26%
APAM.AS Aperam S.A. 22.59 EUR 6.08% 53.29% 11.66%
RDSB.AS Royal Dutch Shell plc 29.99 EUR 5.71% 78.82% 1.14%
ICT.AS ICT Group N.V. 12.25 EUR 5.45% 64.93% 7.44%
NEDAP.AS N.V. Nederlandsche Apparatenfabriek Nedap 46.10 EUR 5.42% 71.85% 12.91%

An interesting list with some known and big names and some lesser names. I’m looking forward to how it will perform over the next year.

My favorite stock screener allows me to do a quick backtest to try to look in the future and get an idea if this tactic is going to work. The total yearly return was 15% over the last 10 years, even last year it achieved a nice profit, which was not a good year for EU stocks. But on the other hand, in 2008-2010 it would not have been possible to select 10 companies that match the criteria.

My philosophy: If you want to invest and your goal is to try to beat the market, you need a system. You need a system that can decide for you what to buy, when to sell and not to panic when things go down. Everything starts with selecting stock. You should not just select random stock here and there based on whims or things you read. No, create a system that suites your style and follow it. These posts give you example of what such a stock selection could look like.

Unless otherwise noted, I do all my research through the Uncle Stock screener. It's a great tool to have in your belt. (note: this is an affiliate link, if you sign up, I get a commision)

Disclaimer: Don't believe anything I say or write. Always do your own research before making any investment decisions.