Within the broad MSCI All-Country World index, there are 289 European companies that yield a dividend of more than 2 per cent – more than the US.
There are good reasons for equity investors to be broadly positive on Europe. The economy has surprised on the upside in recent months, with a surge in activity in Germany as well as signs of improvement in France and Italy. The ECB may have waited too long to start a full-scale programme of sovereign bond purchases, but if there were a good time to come late to the quantitative easing (QE) party, the ECB has chosen it.
Credit growth in the eurozone has been positive since the start of the year. Meanwhile, the fall in the oil price was starting to feed through to European consumers long before the start of QE.
Investors who bought into the eurozone recovery story have been handsomely rewarded (at least in euros). Every major eurozone stock index recorded double-digit growth in local currency terms in the first three months of 2015.
Given all this, European equities are back in favour, and rightly so – but it also means valuations are no longer as attractive as they once were, and investors need to be sure they are not paying too much for a large attention-grabbing yield figure.
The fiscal position of European companies has improved greatly in recent years, and targeting those firms with the cash needed to maintain and possibly grow dividends could ultimately be a more successful income strategy.
Fixed income is not living up to its name – income. There are other options for investors, however, and dividends from equities look like a good one.
Kerry Craig is global market strategist at JPMorgan Asset Management
