Story
Goldman Sachs Lifts Euro Stoxx 50 Dividend Forecasts on Stronger Earnings Outlook
Summary
The investment bank raised its 2027 and 2028 dividend projections for the European blue-chip index, citing robust earnings growth and a favorable sector mix.
Goldman Sachs has raised its dividend forecasts for the Euro Stoxx 50, citing a stronger earnings outlook and favorable performance in key European sectors. The investment bank's equity strategy team now projects dividends for the index will reach 194.7 in 2027 and 218.3 in 2028.
Upgraded Forecasts and Rationale
The revised forecasts represent an increase of approximately 6 index points from the bank's estimates in May. According to a note from Goldman Sachs, the upgrade is supported by a broad-based trend of rising earnings expectations across most major markets, driven by strong growth from companies benefiting from artificial intelligence-related capital expenditure.
The bank noted that since May, dividends in Europe and Japan have kept pace with their respective equity markets. In contrast, S&P 500 dividends have lagged the underlying index, which Goldman Sachs attributes to the continued leadership of technology companies, a sector that typically pays lower dividends.
European Earnings Strength
Reflecting this positive momentum, Goldman Sachs upgraded its fiscal year 2026 earnings per share (EPS) growth forecast for Europe to 15% from a previous estimate of 10%. The bank highlighted that earnings upgrades in the region have been concentrated in several key areas:
Ad- Energy
- Basic Materials
- Technology
- Financials
This favorable sector mix has provided strong support for Euro Stoxx 50 dividend growth, while cyclical consumer sectors have continued to lag, the bank said.
Index Changes and Market Dynamics
Goldman Sachs also noted that an upcoming rebalancing of the Euro Stoxx 50 will see Engie and Nokia replace Volkswagen and Wolters Kluwer. The bank estimates these changes will create a drag of approximately 1 index point per year relative to its previous forecasts.
From a market perspective, the bank observed that dividend risk premia have compressed and appear low compared to historical levels. It attributed this trend to favorable supply-and-demand dynamics and a year of positive earnings revisions.
Read next
More on Stocks
U.S. Stock Futures Rebound as Markets Digest Hawkish Fed Rate Hike
U.S. stock futures rose in overnight trading, recovering from a sell-off triggered by the Federal Reserve's first interest rate hike in three years. Falling oil prices and positive corporate news helped lift market sentiment.
Holtec Suspends $900 Million IPO Amid Challenging Market Conditions
Nuclear services company Holtec Nuclear Corp. has postponed its U.S. initial public offering, which aimed to raise as much as $900 million, citing unfavorable market conditions and weak performance from recently listed peers in the sector.
Snap Stock Climbs on Enterprise Push for New Specs AR Glasses
Shares of Snap Inc. gained in after-hours trading after the company unveiled its new $2,195 Specs AR glasses and announced key enterprise partnerships with Salesforce, Nvidia, and AWS.
Gold Prices Fall as Hawkish Fed Outlook Boosts US Dollar
Gold prices declined after the Federal Reserve raised interest rates by 25 basis points and signaled further tightening, strengthening the U.S. dollar and increasing the opportunity cost of holding the non-yielding metal.