The Best Swiss Dividend Stocks
Are there any good Swiss dividend stocks? Yes, there are quite a few. In this article, we look at the best Swiss dividend stocks.
Despite its small size, Switzerland is home to many great businesses. The easiest way to get exposure to the Swiss market is, of course, to buy an ETF or a mutual fund. But if you want to pick stocks yourself, there are many companies to choose from.
This article contains 23 of the most solid dividend-paying companies, but obviously, there are many more among the smaller companies.
Why invest in dividend stocks?
We believe the most rational approach to investing is based on expected total returns, not on its dividend history. We believe many investors, erroneously we might add, are guided by their dividend bias, and neglect the most important fundamentals. Make sure you understand the business and future prospects of a stock before you invest.
However, there are many reasons why it makes sense to invest in dividend stocks:
- Most of the best businesses pay a dividend.
- Dividend payers have outperformed non-payers for a long time.
- The dividend can be reinvested.
- The dividend can be used as a heuristic in finding solid companies.
- Receiving dividends can make you “immune” to behavioral mistakes because the dividend is less volatile than the share price.
Most of these arguments have been discussed in several articles about dividend investing. For a complete list of the articles, please look at our landing page:
We would also give you a friendly reminder about the seven different model portfolios we offer, both dividend and non-dividend stocks:
Where to buy Swiss stocks?
The biggest Swiss companies are traded as ADRs on the US exchanges. Some brokers, like Interactive Brokers, offer direct access to the Swiss exchange.
Swiss withholding taxes:
The downside with the Swiss market is the steep withholding taxes on dividends, which is a huge headwind if you want to compound. The default tax rate is 35%, one of the highest in the world, perhaps in contrast to the modest taxation locally for Swiss residents. You can get a reduced rate if you reside in a country with a double tax treaty with Switzerland, normally 15%.
Dividend frequency in Switzerland:
Most Swiss companies pay once a year, even Nestle does that.
Rising, steady, or lower dividend, does it matter?
We believe you should focus on the business model and not the dividend. Most great businesses pay a dividend because it’s hard to reinvest the retained earnings at acceptable rates of return. If you mainly invest in dividend-paying stocks make sure that the dividend is sustainable. In most markets, evidence shows that those having a payout ratio of 80% or below are the ones with the most sustainable dividends. Be careful picking stocks with a high yield. Be careful not to fool yourself. A dividend is not like a coupon of a bond!
Some of the best Swiss dividend stocks are these:
Swedish ASEA (Allmänna Svenska Elektriska Aktiebolaget, founded in 1883) and the Swiss BBC (Brown, Boveri & Cie, founded in 1891) merged a couple of decades ago. The headquarter is in Switzerland, and the business segments are Electrification, Industrial Automation, Motion, and Robotics & Discrete Automation.
Interestingly, Investor AB, a Swedish industrial mini/baby Berkshire, owns 11%, and they are a quality shareholder.
ABB’s dividend history:
The dividend has been raised every year since at least 2006. The goal is to pay a rising dividend over time.
Barry Callebaut has made chocolate and cocoa products for 175 years for the B2B market. The company claims they serve 25% of the chocolate and cocoa products in the world. The products are needed for food and beverage producers, pastry chefs, bakeries, hotels, restaurants etc.
Barry Callebaut’s dividend policy:
The aim is to increase the dividend every year, something they have almost managed every year since 2002. The dividend was marginally reduced a couple of years, but still increased from 7 CHF in 2002 to 24 in 2020.
DKSH is an abbreviation for DiethelmKellerSiberHegner. The company can track its history back to the 1860s when four Swiss nationals sailed to the Far East for business reasons. Because of this, the Far East is still the main source of revenue. Today, DKSH is a holding company for many businesses, mainly specializing in outsourcing services. The business units are healthcare, consumer goods, technology, and performance materials. DKSH is not a manufacturer but provides marketing, sales, distribution, logistics, after-sales etc.
DKSH Holding’s dividend policy:
DKSH has explicitly mentioned a progressive dividend policy, ie. they aim to increase the dividend every year, which they have done at least since 2009.
Geberit manufactures and distributes sanitary products like toilets, sinks, flush valves, tap systems, bathtubs, piping systems etc.
Geberit’s dividend history:
Geberit has increased the dividend every year since at least 2010, although some years the distribution has come from capital redemption.
Julius Bär is the only bank that makes it to the list. The bank has gone through a lot of difficulties after allegedly being involved in money laundering and tax evasion for decades. However, these days are most likely over. The bank provides investment management, wealth management, and trading services. Most of the income is generated via commissions and fees.
Julius Bär’s dividend policy:
40% of net profits aim to be distributed as dividends and equal to the distribution the prior year. The dividend has been raised or kept steady since 2009.
Lindt & Sprüngli:
The full name is Chocoladefabriken Lindt & Sprüngli AG, and for those literate in German it’s obvious that Lindt produces chocolate. It’s regarded as a premium brand and it’s priced higher than most other brands. In addition to chocolate, Lindt produces confectionary and some other sweets. It was founded as long ago as 1845.
Lindt’s dividend policy:
Lindt is a famous dividend payer known for its long track record and has increased the dividend for at least 15 years in a row. In addition to the dividend, Lindt returns shareholders’ capital by buying back shares. However, Lindt normally trades at a premium to the market in terms of earnings multiples. It never trades on the cheap side.
Because of the high earnings multiples, Lindt has a low dividend yield, normally around 1%.
Lonza supplies the important Swiss pharmaceutical industry with specialty ingredients.
Lonza’s dividend policy:
The dividend has been kept steady most of the time since 2008, but increased in 2010, 2015, and 2017, from 1.75 to 2.75 during this period.
Nestle is probably the most famous Swiss company and one of the European stocks with the longest dividend track records. The company is a widely diversified conglomerate of consumer brands spanning baby food, bottled water, prepared dishes, confectionery, cereals, pet care, soft drinks, and more. Sales are close to 100 billion EUR a year.
Additionally, Nestle has a stake of 23% in L’Oreal, the French cosmetic company, currently valued at 40 billion EUR.
Nestle’s dividend policy:
Neste’s dividend has been raised every year since 1995. Prior to 1995, the dividend was frequently kept steady but it has never been lowered since at least 1959, which is one of the best track records in Europe. Nestle aims for an annual rise.
The payout ratio has been around 60 to 65% over the last decade and the dividend growth around 6%, more or less in tandem with the EPS growth. Thus, the dividend seems pretty safe as of now.
Basel is home to two of the world’s biggest drug companies: Novartis and Roche – Novartis being the smallest based on the market cap. Novartis is the result of the merger between Novartis and Sandoz, the latter dormant as a brand after the merger, but later reestablished as an own brand.
Novartis’ dividend policy:
The dividend has been increased every year since at least 1996, from 0.5 to 3 CHF, a dividend growth of 7%. The aim is to pay out most of the earnings as dividends and at the same time pay a rising dividend.
Partners is a global private equity firm with 110 billion USD in assets under management in private equity, private infrastructure, private real estate, and private debt. It was listed in 2006 and the employees own almost 50% of the company.
Partners dividend history:
The dividend has been raised every year since at least 2009 and because of the capital-light asset model, we can expect further increases in the future. Historically, about 60-80% of the earnings have been distributed.
PSP Swiss Property:
PSP is one of Switzerland’s biggest real state companies, investing primarily in offices and business premises. The main investments are in Basel, Geneve, Lausanne, Bern, and Zürich. It has been listed since 2000 and has compounded at 13% since 2003 with the dividends reinvested.
PSP’s dividend policy:
The goal is a payout ratio of at least 70% of the earnings, and to ensure a sustainable dividend trend, ie. increasing every year, something they have accomplished with the help of distributions from contribution reserves. The dividend yield is around 3% at the beginning of 2021 but has come down from 6% over the last decade.
Richemont is producing luxury goods, distributing globally, in products spanning from watches, clothing, leather goods, and accessories.
Richemont dividend policy:
The dividend has been reduced twice since 2000: in 2009 and 2019, the latter due to Covid-19. Worth noting is that Richemont reorganized in 2008. From 2010 until 2018 the dividend increased from 0.35 to 2 CHF, before it was reduced to 1 for 2019.
Roche is one of the world’s biggest pharmaceutical companies. Its drugs span a wide range of diseases like leukemia, metabolic disorders. skin cancer, hepatitis, anemia, etc. The list is long and it has a very diversified business model.
Roche’s dividend policy:
Roche aims to pay most of its earnings as dividends. The dividend has been increased every year since at least 2001, from 1.3 CHF to the latest 9 CHF.
SGS is an inspection, verification, testing, and certification company. This involves checking the condition and weight of traded goods at transshipment, test products against relevant safety standards, and certification and verification of customer standards.
SGS’ dividend history:
SGS aims to raise the dividend every year and maintain it, which they have managed since at least 2010.
Sika, founded in 1910, is a specialty chemical company that mainly supplies the building and automotive industries. Products are mainly for roofing, sealing, bonding, waterproofing, and refurbishment. The business segments are pretty cyclical.
Sika’s dividend history:
Sika has increased the dividend annually since at least the year 2000. Some of the years the dividend has come in the form of a repayment of the capital contribution. The goal is, obviously, to pay a dividend that is raised every year, however, only if profitability allows.
Sonova, perhaps better known as Phonak for those interested in cycling (Phonak was the sponsor of the infamous Floyd Landis scandal in 2006), is a leading provider of hearing aid solutions through its many brands.
Sonova’s dividend history:
Sonova aims for distributing a stable and over time increased dividend. So far they have been successful: since 2006 the dividend has increased from 0.75 CHF to 2.9. For 2020 the dividend is offered as a stock dividend.
Straumann makes dental implants and products and services related to that. It might sound like a niche business, but Straumann is represented in most parts of the world and has grown via both acquisitions and organic growth.
Straumann Group’s dividend policy:
The first priority is to set a sustainable dividend that leaves room for changes in the earnings – a margin of safety. Since 2011 the dividend has been kept steady or raised – from 3.75 to 5.75 CHF.
Swisscom is a classical telecom company offering mobile and fixed services, broadband, and TV.
Swisscom’s dividend policy:
Telecom is not a growth business and is highly regulated in the EU, making it difficult to compete. Because of the lack of growth, the dividend growth has been very low: from 11 CHF per share in 1997 to the latest of 22 per share, a modest annual growth of 3%. Even worse, over the last decade, the dividend has been kept steady. Most of the earnings are paid out as dividends.
Swiss Prime Site:
Swiss Prime Site is a real estate investment and management company, slightly bigger than PSP mentioned above. The company develops, invests, and manages offices and business premises in the biggest cities of Switzerland.
Swiss Prime Site’s dividend policy:
The payout ratio is around 60-80% and the dividend has been held steady or increased since at least 2005.
Swiss Re is one of the world’s biggest reinsurers and has been in the business since 1863.
Swiss Re’s dividend policy:
Just like its competitor north of the border, Munich Re, Swiss Re has been a reliable dividend payer but falls shy of Munich Re. The aim is to let the dividend grow with earnings or at least maintain it. The current track-record spans from 2009 when it was cut drastically. Since then it has been increased every year.
Temenos provides software and back-office solutions for financial companies, mainly bank and insurance companies. 41 of the world’s biggest 50 banks are among the customers.
Temenos’ dividend policy:
The dividend was initiated in 2012 and has been increased every year since then, although the company has never explicitly announced a certain dividend policy.
Vifor Pharma is a specialty pharmaceuticals company that collaborates with Germany’s Fresenius Medical Care. The focus is on developing products for people with chronic kidney failure where most of the distribution is centered around dialysis clinics.
Vifor Pharma’s dividend history:
Vifor Pharma has one of the best track records on the Swiss exchange: The dividend has been kept steady or increased since 1996. The dividend has been increased from 0.1 CHF in 1996 to the latest 2 CHF, although it has been kept at 2 CHF for the last four years.
Zurich Insurance is Switzerland’s biggest insurer. It started as a reinsurer 150 years ago, but the main segments today are life insurance, pension products, and traditional property & casualty insurance. The reinsurance business is minor.
Zurich Insurance dividend history:
The dividend has been kept steady or increased since 2011. The payout ratio is set at around 75% and the dividend should be kept steady or increased.
The best Swiss dividend stocks – conclusion:
Switzerland is a small country, but it’s still a banking and industrial powerhouse located in the middle of Europe and still not a part of the EU.
Swiss companies have a good track record and we hope you find our list of the best Swiss dividend stocks useful.