European Income For 2016

Look to Europe for 2016 Income Investing

With the U.S. market still near its all-time peak, smart income investors are looking overseas.

Though Europe has been mired in recession for several years, economic prospects are now looking distinctly better.

What’s more, many European companies pay decent dividends, making them attractive for U.S. income investors.

The challenge is finding a solid company with decent liquidity on U.S. markets that also pays a good dividend and is located in an attractive country with satisfactory growth. Luckily, I’m up to the task.

Poised for Growth

Overall, the European Union (EU) is expected to perform better in 2016 than in most previous years.

The eurozone is expected to grow by 1.6% in 2016 according to the IMF, while Britain is expected to grow at 2.2%. Sweden, Ireland, and several Eastern European EU members are expected to grow at 3.0% or more.

Given that these are all relatively rich countries, those growth rates are satisfactory.

In fact, they’re only slightly below the IMF’s 2016 forecast for the United States of 2.8%, which I’d regard as pretty optimistic.

By identifying companies from the faster-growing European countries, we can ensure a comfortable macroeconomic background for our investment’s activities.

And, by investing in the EU, you’re also buying into a more stable macroeconomic environment than the United States currently offers.

Admittedly, the eurozone monetary policy is over-stimulative, with ECB Chairman Mario Draghi buying 60 billion euros ($65 billion) worth of bonds each month, a policy similar to Ben Bernanke’s most expansive “quantitative easing” in 2012-13.

On the other hand, the eurozone budget deficit is expected to have been only 2.1% of gross domestic product (GDP) in 2015, compared to 2.6% of GDP in the United States. And it’s expected to have had a current account surplus of 3% of GDP, compared to a deficit of 2.5% of GDP in the U.S.

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