(EUROPEAN COMPANIES ARE CASH-RICH)
May 8, 2024
Hello everyone,
Companies in the Stoxx 600 index have nearly 1.5 trillion euros ($1.6 trillion) in cash on their balance sheets - that’s 25% higher than pre-pandemic levels, according to Goldman Sachs.
The bank further stated that free cash flow yield in Europe is around 6% - more than 1% point above that of the United States. Sectors with the highest yield include autos, commodity producers, and financials. Goldman favors the latter two, given their clearly stated focus on shareholder returns.
Balance sheets are strong. And the bank notes that net debt to EBITDA (earnings before interest, taxes, depreciation, and amortization) is close to an all-time low. Furthermore, Goldman says, “Europe has rarely looked cheaper on an absolute and relative basis.”
Regarding dividends, the bank believes they can continue to grow in Europe given that payout ratios are below the historical average. They expect dividends to grow around 3% in 2024 and 4% in 2025.
Goldman particularly favors stocks in the banking and energy sectors. The MSCI Europe Value index offers a dividend yield of 4.8% - 2.8 times that of the MSCI Europe Growth.
Goldman lists here companies in the Stoxx Europe 600 with the highest, sustainable, 12-month forward dividend yields in each sector.
This is not a recommendation to buy any of these stocks. It is purely for your information to show you what dividend yields are available. Many people are interested in yield, so this is why I’m illustrating these examples.
Bonza removed from Australian skies.
Negotiations have failed between budget airline Bonza and its aircraft lenders. So, the decision has been made to remove the airline’s fleet from Australia.
The airline's financial issues have forced lease agreements on a fleet of Boeing 737-8 planes to be terminated.
Almost 60,000 passengers say they are owed money after many of their bookings were canceled.
The low-cost carrier was less than 12 months old when it canceled all flights across Australia and entered voluntary administration last week.
Wearing Clothing made from Bamboo supports the environment.
Bamboo is the fastest-growing plant in the world. It stores five times more carbon than other hardwood trees. It stores this carbon in its plant and roots, in turn helping to regenerate soil health.
It requires minimal water and little to no pesticides, which protects surrounding habitats and ecological systems from harsh chemicals used to grow crops.
Bamboo viscose, a fibre crafted from bamboo, is very soft. The fabric has natural moisture-wicking properties, meaning it can absorb moisture away from the skin.
Bamboo is biodegradable, making it a more environmentally friendly choice compared to cotton, which often requires more water and chemicals to grow and process.
Brands that use bamboo in their clothing include: Baserange, BAM, Peachaus, Patra, & Lotties Eco.
QI Corner
Goldman expresses strong confidence in the robustness of the U.S. economy, projecting a more positive outlook for the growth of U.S. GDP in 2024 and 2025 compared to consensus forecasts.
A sign on the gate of a Glen Innes property in New South Wales. It seems Australians take their privacy quite seriously.
Cheers,
Jacquie
