Goldman Sachs raises Euro Stoxx 50 dividend forecasts

Investing.com -- Goldman Sachs increased its dividend forecasts for the Euro Stoxx 50 index to 194.7 for 2027 and 218.3 for 2028, representing an increase of approximately 6 index points above estimates from May.

The investment bank noted that dividends have performed well across most regions since May, with European and Japanese dividends keeping pace with equities. S&P 500 dividends lagged behind their underlying equity index, leading to a decline in implied dividend yields relative to other regions. This reflects continued technology sector leadership in equities and earnings revisions, as tech companies typically pay lower dividends.

Earnings expectations have trended higher across most major markets, led by the United States and North Asia. Strong earnings growth from companies benefiting from artificial intelligence capital expenditure, particularly semiconductor firms, drove the increases. Goldman Sachs' equity strategy team upgraded its fiscal year 2026 earnings per share growth forecast for Europe to 15% from 10%.

Within Europe, earnings upgrades concentrated in energy, basic materials, technology and financials sectors, while cyclical consumer sectors continued to lag. The favorable sector mix has supported Euro Stoxx 50 and FTSE 100 dividends.

The Euro Stoxx 50 index will undergo a rebalancing this month, with Engie and Nokia replacing Volkswagen and Wolters Kluwer. The changes will result in approximately 1 index point drag per year relative to previous forecasts. The Stoxx 600 Banks index will add four new entries with no exits.

Goldman Sachs observed that dividend risk premia have compressed and appear low compared to historical levels and credit spreads. The bank attributed this partly to favorable supply and demand dynamics and positive earnings revisions over the past 12 months.

The beta of 1-year forward Euro Stoxx 50 dividends has rebounded from lower levels reached earlier in 2026, while betas for longer-dated dividends remained stable.

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