Formerly, the annuity, it was the obligations. To take stable resources of its investments, nothing was worth the government bonds, securities, fixed income regarded as risk-free. With the decline in the performance of the obligations of a State, that is another matter. Since 2015, the interest rate in the long term have dropped to less than 1 %, pushing investors to re-discover the charm of more shares to generate income. “The stock’s generous dividend have always had their followers, but with the lower rates, they attract a crowd of investors in search of income,” says Eric Labbé, manager of the fund CPR Euro High Dividend. The values of the CAC 40 index distribute, and near 3 % dividend per year.
To assess the cost-effectiveness of forty major values of French, and even enjoy it directly, investors can rely on the dividends distributed by the fund Lyxor CAC 40. The index fund quoted on the stock Exchange – a tracker, language specialist – follows the CAC 40 index with small differences related to management fee (0.25% per year). And only the year 2017, it has posted a return of 2.8 %. Not so bad, when we know that the profitability of an obligation to State on a european level was less than 1 % !
of Course you can find much better when it is targeted directly to some companies. Example, with the oil group Total. The French giant, and distributed in march, June, September and December 2017, four quarterly dividends of 62 cents per share, or 2,48 euros in total on the year as a whole. The next dividend increase of 3.2 %. Other groups in the CAC 40, which provide returns as enviable, such as AXA, Engie, Orange, Sanofi, or Suez (see table). This is also the case of smaller companies, as most of the regional banks of Crédit Agricole. Or real estate investment companies listed in the stock Exchange (SIIC), famous for the profitability of their dividends, as Klepierre, the second european operator of shopping centers, Carmila and Mercialys, which collect, respectively, the malls and arcades of the groups Carrefour and Casino, or Icade, the property of the Caisse des dépôts (see table).
Beware, however, because with the shares, neither the capital nor dividends are guaranteed. They can raise or lower. Appreciated for decades for the regularity of its income, the american giant General Electric has reduced its dividend by half since December, 2017, resulting in a double penalty for its shareholders : in addition to the shortfall in revenues, the share price has dropped 50% in one year.
Follow the advice of some managers
individuals that a good dose of risk does not scare have several ways to take advantage of these new “pensions”. Buy stocks of companies publicly traded on a securities account as usual, or to a PEA, can cash in their dividends. For those who don’t want to deal with it, there are also investment funds specialized in shares of so-called performance. They are often recognized by the use of the word “dividend” in their name. Each manager has its own selection of shares. Example with the fund Tocqueville Dividend. Among the main values of its portfolio, 15 % of insurance companies, like Prudential uk and the German Allianz, and 14 % of banks (of which BNP Paribas, ING Groep or HSBC) and oil companies such as Royal Dutch Shell and Total. “We are targeting companies that pay dividends sustainable,” insists Nicolas Sémar, manager for close to twenty years of fund NN Euro High Dividend, whose portfolio consists of shares, providing, in average, 3.9 % dividends per year, which include Royal Dutch Shell or ING.
Another possible approach : to follow the MSCI index of actions of the european Union rate of dividend (or MSCI EMU High Dividend Yield Index, which includes groups such as Total, Allianz or AXA, but also Nokia, restated since its acquisition of Alcatel. To take advantage of the profitability of the dividends distributed by the 34 shares of this index, investors can buy directly in Exchange of the shares of the funds tracker Amundi ETF EMU High Dividend (code FR0010717090).
Dividends, or capital gains tax
Some of the funds distribute to their clients the dividends of their portfolio, others are accumulating, that is to say that the dividends are kept in the fund the value of which increases proportionately. This option had historically for tax reasons, as for a long time the gains thus accrued were less taxed. This is no longer the case since the tax reform of September 27, 2017. The taxation of dividends and capital gains are aligned, with a levy one-time lump sum (PFU) of 30 %.
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The preference between the capitalization and the distribution of income is therefore now a practical choice. For some, collect its income lets you know that you can actually spend without touching the principal. For others, it is also easy to keep the dividends in a fund, and to make partial sales corresponding to its needs.