To help you understand what's happening in global economies, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

As the U.S. economy keeps on humming, Europe has a far tougher economic outlook. Problems new and old are combining to slow growth in the 20-member club of nations that use the euro, the world’s No. 2 economy when taken as a bloc.

Actual recession in the eurozone is unlikely. Just slow and uneven growth ahead in 2025. Business sentiment across the bloc is negative. Ditto for consumer sentiment, despite rising paychecks. Inflation remains higher than it should be, as in the U.S., though similarly to here, it is easing, in fits and starts, allowing the European Central Bank to lower interest rates fairly quickly next year. (Note that that will keep the euro weak vs. the dollar, since the Federal Reserve won’t be cutting as fast.)

Now, trade tensions loom over Europe, whose economy depends heavily on trade. 40% of GDP in the eurozone stems from exports within and beyond its boundaries. President-elect Donald Trump says that he is considering levying tariffs of 10% to 20% on goods imported from Europe, threatening sectors like cars, chemicals, machinery, food and drugs. The EU can probably work with the new U.S. administration on trade issues. Trump threatened steep tariffs on European imports during his first term, but decided to hold back most of them in favor of more-targeted levies. European political leaders will hope to again negotiate with him, perhaps starting with offers to buy more LNG — liquefied natural gas — from the U.S., an American export that Trump wants to foster.

A U.S.-China trade war would also hurt Europe, in two different ways. U.S. tariffs on Chinese goods would weaken China’s economy, a key export market for Europe. And reduced access to U.S. consumers would likely force Chinese sellers to expand in Europe by cutting prices, further pressuring European manufacturers.

Meanwhile, domestic politics and geopolitics keep worsening for Europe. The eurozone’s biggest economies, Germany and France, face political paralysis as each tries to assemble new governing coalitions. Fiscal strains in both countries caused their respective governments to fall recently, with little sign of a consensus on how to cut spending, raise taxes or otherwise deal with their rising debt loads.

Look for European nations to spend more on defense, as Russia’s war on Ukraine drags on and Donald Trump pushes NATO members to spend enough on defense to meet the NATO treaty’s 2%-of-GDP rule. Most members do so already, but with Washington likely to pull back on aid to Ukraine, Europe will be forced to play a bigger role in deterring Moscow and keeping Kyiv fighting — no easy task for a group of countries mired in slow growth and political turmoil. None of this bodes well for Europe as a market or investment destination for U.S. goods or dollars.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

To help you understand what is going on in the global economy and what we expect to happen in the future, our highly-experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest...

Further interest rate hikes are likely in most advanced economies this year. But most major central banks are near the end of their rate-hike cycles. 

The European Central Bank is leaning toward another quarter-point increase in September, but it’s possible that slowing economic activity in the eurozone might prompt the ECB to pause at its next meeting. The Bank of England will likely raise rates again in September, after raising them in August. The Bank of Canada looks set to repeat its quarter-point hike in July at its next meeting in September unless core inflation slows soon. Central banks in advanced economies will likely not start reducing interest rates until well into 2024.

Most Latin American countries will start to cut interest rates this year. In fact, some already are. Having been among the first central banks in the world to raise interest rates in 2021, Brazil and Chile have started to cut interest rates, and will likely continue to do so in coming months. Ditto for Peru and Colombia. Mexico’s central bank will likely be the last in the region to embark on rate cuts, as core inflation remains stubbornly high there and the labor market stays tight.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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To help you understand what is going on in the economies of Europe, the fiscal discussions of the European Union and what we expect to happen in the future, our highly-experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest...

The eurozone economies are holding up better than expected this year. The bloc’s overall economy eked out a 0.3% expansion in the second quarter, despite the ongoing energy crisis and high inflation. Among its largest economies, Italy was the only one to contract. Growth in Germany was flat, while the economies of Spain and France grew modestly in the second quarter. Admittedly, growth was skewed upwards by one-off factors in France and Ireland. But after stagnating in the first quarter and shrinking in the last quarter of 2022, any growth is welcome. 

A contraction is still likely in the second half of the year in the eurozone. Firms in the bloc are reporting stagnating activity levels, and manufacturing activity is already contracting in many of the economies in the region that uses the euro. Interest rate hikes, over the past year, have led to a tightening in credit conditions. 

The European Central Bank (ECB) has one more interest rate hike in store this year. Headline inflation fell in July, but core inflation — which excludes energy and food — was unchanged at 5.5%. Like the Fed, the ECB has slowed its pace of rate increases. But it has left the door open for another hike in September if inflation remains entrenched.

The European Union is working on new spending rules for its members that would rewrite the EU’s existing fiscal rulebook — the Stability and Growth Pact (SGP), which aims to prevent excessive borrowing by governments. The details are uncertain, but the new rules will likely require EU members to run smaller budget deficits. The EU has let members exceed its normal deficit limits since March 2020. 

EU member states remain split on proposed changes to the fiscal rules, especially on whether there should be numerical benchmarks and automatic rules for all on annual debt reduction, or if each country should negotiate spending cuts with the EU’s executive body. If member states fail to agree to changes by year-end, the EU’s existing rules, with their automatic cuts, will become effective again in 2024. Germany favors that approach, while France prefers case-by-case deficit targets. 

Whatever happens, EU budget deficits are likely to shrink in coming years as members cut the huge subsidies triggered by COVID-19 and Europe’s energy shock.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Stocks kept investors on edge for most of Thursday, swinging between positive and negative territory throughout the session as investors sized up global central bank headlines.

Kicking things off was an early morning decision from the European Central Bank (ECB) to hike its key interest rate by an unprecedented 75 basis points. A basis point is one one-hundredth of a percentage point.

"Stuck between a rock and a hard place, ECB policymakers felt they had little option but to go ultra-big with the rate rise to try and cut the rope on inflation and spark a fall from its ascent," says Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. She adds that it couldn't have come at a worse time. "With energy prices so elevated, bringing an end to the price spiral is going to be far from easy, and the ECB is warning that fresh hikes will be on the way."

Back at home, Federal Reserve Chair Jerome Powell this morning doubled down on the hawkish tone he struck in a late-August speech in Jackson Hole, Wyoming. Speaking during a virtual conference hosted by the Cato Institute, Powell indicated that the Fed is firmly committed to fighting inflation and will be as aggressive as it needs to be in order to do that. "It is very much our view, and my view, that we need to act now forthrightly, strongly, as we have been doing, and we need to keep at it until the job is done," he said.

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These two events sparked a wild ride for investors, but at the close, the major market indexes were in the green. The Dow Jones Industrial Average ended up 0.6% at 31,774, the S&P 500 Index rose 0.7% to 4,006, and the Nasdaq Composite gained 0.6% to 11,862.

Other news in the stock market today:

• The small-cap Russell 2000 tacked on 0.7% to 1,844.
• U.S. crude futures gained nearly 2% to end at $83.54 per barrel.
• Gold futures fell 0.4% to finish at $1,720.20 an ounce.
• Bitcoin rose 1.8% to $19,355.05. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
• Snap (SNAP) stock jumped 9.4%, building on Wednesday's 6.4% gain, after a report in The Verge detailed a leaked memo from the social media company's CEO Evan Spiegel. According to the article, the internal memo to employees detailed SNAP's plans to grow Snapchat's user base by 30% to 450 million and increase revenue to $6 billion by the end of 2023. UBS Global Research analyst Lloyd Walmsley (Buy) said he is "encouraged" by the targets. "We recognize this could be an internal stretch goal and the company is in a show-me mode given macro uncertainty," Walmsley writes in a note to clients. "Nonetheless, we think the company has done a good job executing, showing daily active user growth of 85% since 2018 to date and growing revenue 3x from 2018 through 2022 estimates. As such, we give management the benefit of the doubt here."
• GameStop (GME) rose 7.5% after the video game retailer reported earnings. While GME reported lower year-over-year sales and a wider per-share loss in its second quarter, it unveiled a partnership with crypto exchange FTX. "At a high level, the partnership will introduce more GameStop customers to FTX's community and its marketplaces for digital assets," says Wedbush analyst Michael Pachter, who has an Underperform (Sell) rating on GME. "The two companies will collaborate on new ecommerce and online marketing initiatives, with GameStop beginning to carry FTX gift cards in select stores as its preferred retail partner in the U.S. Financial terms were not disclosed, though we are skeptical that the partnership will drive meaningful revenue or profit contribution."

REIT Dividends to Help Fight Inflation

Next week, Wall Street will get the latest reading on inflation data, with the consumer price index (CPI) for August set for release ahead of the Sept. 13 open. Prices eased back slightly in July, but it's likely that inflation is not done yet.

"There is some evidence that food prices may be moderating after a year's worth of large monthly increases," says Kiplinger economist David Payne. "But continuing large wage increases at many businesses are likely to keep upward pressure on most prices for some time to come." And even if inflation continues to trend lower, it will take awhile to bring prices back down to a sustainable level.

Given that backdrop, investors should know that dividend stocks offer a powerful way to mitigate the effects of red-hot inflation. And one of the best places to find healthy yields is in real estate investment trusts (REITs). Remember, REITs are an especially attractive option for income-seeking investors because they are legally required to distribute at least 90% of their taxable earnings back to shareholders. It's even better when these generous REITs boast exceptional dividend growth. Here, we take a look at 12 real estate stocks that have consistently raised their payouts in recent years, and delivered impressive growth to boot.

Investors sifted through a busy news cycle on Thursday and decided they liked what they saw, with stocks ending higher for a third straight day.

Things got started early this morning on word that the European Central Bank (ECB) lifted interest rates by a higher-than-expected 50 basis points (a basis point is one-one hundredth of a percentage point). The rate hike marks the first for the ECB in 11 years, and comes as the central bank attempts to battle sizzling inflation and slowing economic growth across the eurozone.

Back at home, the earnings calendar remained in focus, with the latest quarterly results from Tesla (TSLA) garnering notable attention. The maker of electric vehicles reported second-quarter earnings that beat analysts' consensus estimate, though they fell short on revenue.

"The company was clearly profitable this quarter," says Wes Gottesman, market advisor at Web3 trading platform TradeZing. "However relative to other quarters, the automotive revenue was down to $14.6 billion, as compared to the previous quarter's $16.9 billion. The culprit clearly being the shutdowns in Shanghai, and cutbacks in production/deliveries. That was the issue for this quarter, at no fault of their own. Their gross margins are at 25%, which means they have significant pricing power, while increasing production. Tesla also has a strong solar energy component which will continue to prosper as the world transitions to solar energy."

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In addition, TSLA sold roughly three-quarters of its Bitcoin purchases in Q2. The move was made to "maximize" the company's cash position, CEO Elon Musk said in the earnings call. He added that Tesla is "open to increasing" its Bitcoin holdings in the future, and that "this should not be taken as some verdict" on the cryptocurrency. TSLA did not sell any of its Dogecoin, according to Musk.

Still, Bitcoin fell 2.0% to 23,197 on that news (Bitcoin markets don't close; price taken at 4 p.m. ET.), while TSLA shares soared 9.8%. Tesla's rally helped the broader stock market brush off news that President Joe Biden tested positive for COVID-19, with the Nasdaq Composite gaining 1.4% to 12,059. The S&P 500 Index rose 1.0% to 3,998, while the Dow ended up 0.5% at 32,036.

Other news in the stock market today:

• The small-cap Russell 2000 added 0.5% to 1,836.
• U.S. crude futures shed 3.5% to settle at $96.35 per barrel.
• Gold futures rose 0.8% to end at $1,713.40 an ounce.
• AT&T (T) plunged 7.6% after the telecom firm lowered its full-year free cash flow guidance to $14 billion from $16 billion, "to reflect heavy investment in growth and working capital impacts related to timing of collections," the company said in its press release. This overshadowed T's higher-than-expected adjusted earnings of 65 cents per share and revenue of $29.6 billion in the second quarter.
• Travel stocks struggled today following negative earnings reactions for American Airlines (AAL, -7.4%) and United Airlines (UAL, -10.2%). While AAL posted its in-line earnings per share of 76 cents on higher-than-expected revenue of $13.42 billion, it cut third-quarter capacity, now expecting to fly 8%-10% below what it did in Q3 2019. And UAL recorded a slimmer-than-anticipated second-quarter loss of $1.43 per share, but revenue of $12.11 billion fell short of the cosensus estimate.
• Data from the Labor Department showed jobless claims rose 7,000 on a weekly basis to 251,000 – the most since last November. Still, this did little to move markets today. "With earnings season in full swing and the ECB announcing its first-rate hike in more than a decade, the slight tick up in jobless claims may take a backseat in investors' minds," says Mike Loewengart, managing director of investment strategy at E*Trade. "But with jobless claims on an upward trend over the last month, some may question if the labor market will start to factor in more to the Fed's plan as it works aggressively to tame inflation."

A "Best-of-Both-Worlds" Scenario for Investors

Mid-cap stocks were another area of the market where investors found green ink today. This group of equities (typically firms with market capitalizations that fall between $2 billion and $10 billion) have been quietly holding their own in recent weeks, up 0.8% today and 6.7% so far this quarter.

Often, mid caps are overlooked by those seeking out larger-cap names for stability or small-cap stocks for growth. Yet, this area of the market can provide investors a "best-of-both-worlds" scenario: higher growth potential than large caps and less volatility than smaller cap names.

And in the current backdrop of "a fast-moving business cycle and global central bank tightening," investors should consider mid-cap stocks, say Wells Fargo Investment Institute strategists; specifically, those with "the potential to post stable, high-quality earnings." Here, we've put together a list of the best mid-cap stocks to buy for these very qualities. What's more, each enjoys top ratings from Wall Street's pros.

Stocks extended this week's decline on Thursday amid another choppy trading session. The focus today was on the latest European Central Bank (ECB) meeting – which comes ahead of next week's policy update from the Federal Reserve. While the ECB maintained the status quo for now, it unveiled plans to raise rates, likely by 25 basis points (a basis point is one-one hundredth of a percentage point), or 0.25%, in July and again in September. It also said it would end its bond-buying program on July 1.

Meanwhile, back at home, data from the Labor Department showed that weekly jobless claims rose 27,000 to a seasonally adjusted 229,000 in the week ended June 3 – their highest level since mid-January.

"The market has been searching for some direction amid a relatively quiet week on the economic data front," says Mike Loewengart, managing director of Investment Strategy at E*TRADE. "A bump up in jobless claims may not be the catalyst, but in a perverse way, a rise in jobless claims could be one indicator that the Fed’s rate-hike plan is slowing demand and could stick the landing. But with a Fed decision on the horizon and with the ECB signaling rate hikes in its future, investors will likely continue to be in 'wait and see' mode."

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The "wait and see" mode was evident early on in today's trading, but losses for the broad-market indexes accelerated as the session wore on ahead of tomorrow morning's release of the latest consumer price index (CPI). The selling was widespread too, with all 11 sectors finishing in the red, led by big drops for financials (-2.5%) and technology (-2.7%).

At the close, the Dow Jones Industrial Average was down 1.9% to 32,272, the S&P 500 Index fell 2.4% to 4,017 and the Nasdaq Composite – which briefly traded in positive territory mid-morning – plunged 2.8% to 11,754.

Other news in the stock market today:

• U.S. crude futures fell 0.3% to settle at $121.63 per barrel.
• Gold futures slipped 0.2% to end at $1,852.80 an ounce.
• Bitcoin edged down 0.3% to $29,989.54. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
• It's been a rough stretch for Target (TGT), with the consumer discretionary stock down more than 30% in the past month following a negative earnings reaction and current-quarter operating margin warning. The retailer today tried to right the ship by announcing that it is hiking its quarterly dividend by 20% to $1.08 per share, but shares still slid 1.4%. Despite the recent woes, Argus Research analyst Chris Graja maintained his Buy rating. While risks remain, such as reduced consumer spending amid elevated inflation and higher commodity costs, "we believe that Target has the right strategy and has made the right investments to gain market
  share over time," Graja writes in a note.
• Cruise stocks were some of the biggest decliners on Wall Street today, with Carnival (CCL), Royal Caribbean Cruises (RCL) and Norweigian Cruise Line Holdings (NCLH) shedding 9.3%, 8.3% and 9.2%, respectively.

Time to Jump Back Into Small Caps?

Small-cap stocks also suffered significant losses in today's trading, with the Russell 2000 index shedding 2.1% to end at 1,850. The benchmark has lagged its larger-cap peers over the past 12 months, down 19.3% (compared to losses of 6.7% for the Dow, 5.0% for the S&P 500 and 15.6% for the Nasdaq). Given this lengthy stretch of underperformance, are the tides set to turn for small caps?

"Small-cap stocks tend to be relatively high beta, implying that they outperform when the economic environment is improving," BCA Research says in a note. "Slowing global growth is therefore a headwind for small-cap stocks. Moreover, they are more vulnerable to negative dynamics from inflationary pressures due to their typically smaller profit margins."

However, the investment research firm asserts that the longer-term underperformance of small caps could suggest that many of these growth concerns are already priced in. Plus, many smaller cap stocks are now "extremely attractive on a valuation basis, which could support their performance going forward," BCA adds.

Investors who are looking to dip their toes into small caps – but are still wary of potential risks – may want to consider these exchange-traded funds (ETFs), which help provide more diversified exposure. But for those ready to dive right in, here are 12 of Wall Street's favorite small-cap stocks right now. We scoured the Russell 2000 to find the top-rated picks among small companies, and each name featured here is projected to deliver outsized returns over the next 12 months or so. Check them out.

Kiplinger frequently talks about the S&P 500 Dividend Aristocrats – America's dividend-paying champions, with long track records of uninterrupted dividend growth. But today, we're going to dedicate some time to a lesser-known but still renowned group of dividend royalty: the European Dividend Aristocrats.

The S&P Europe 350 Dividend Aristocrats, to be specific, are a group of 40 European blue chip stocks that have a proven ability to raise their payouts year after year. And while they're similar to America's Aristocrats in that they reflect a dividend track record, the index has one important difference.

Namely, the S&P Europe 350 Dividend Aristocrats only need 10 years of uninterrupted dividend growth to qualify for inclusion. That's admittedly much less than the S&P 500 Dividend Aristocrats, which require a full quarter-century of unfettered annual payout improvements.

Also noteworthy is that while American dividend payers typically make their cash distributions quarterly, European dividend stocks tend to pay only once or twice a year. And in some cases, those dividends are split unevenly between an interim midyear payment and final end-of-year distribution.

So … why might investors sniff out Europe's dividend royalty when U.S. Aristocrats are required to have a much more impressive track record?

For one, yield. European dividend stocks have for a long time yielded more on average than their U.S. counterparts. According to S&P Dow Jones Indices, the European Dividend Aristocrats' index had an indicated dividend yield of 2.9% – a decent clip higher than the U.S. Aristocrats' 2.5%.

There's also the value proposition.

"It wouldn't surprise [us] if European stocks did a bit better this year," Jason Trennert, chief investment strategist at Strategas, and Ross Mayfield, investment strategy analyst at Baird Private Wealth Management, said earlier this year. "Part of that is just the massive valuation differences between their markets vs ours, but [we would] also note that their indexes tend to be more value-oriented, and we currently have a bias toward value over growth."

Let's take a deeper dive into 10 European Dividend Aristocrats. The companies featured here stand out among European dividend stocks for their rich yields and modest valuations.

Data is as of March 22, unless otherwise indicated. The S&P Europe 350 Dividend Aristocrats listed below are the top 10 constituents of the index as of Jan. 31. Companies are listed by the number of years they've consecutively raised their dividends, from lowest to highest. The index of Dividend Aristocrats is maintained by S&P Dow Jones Indices. Dividend history based on company information and S&P data.

United Utilities Group 

• Dividend yield: 4.2%
• Consecutive annual dividend increases: 10 

United Utilities Group (UUGRY, $25.50) provides water and wastewater services to more than 3 million homes and businesses in England's northwest, which includes Greater Manchester, Merseyside, Cheshire and Cumbria, among other areas.

Utility stocks are pretty much the same world-round: You can rely on them for slow but steady growth over time. Not to mention, they're dependable dividend stocks. United Utilities has been paying its shareholders since 1990, and its current dividend-growth streak sits at a decade. Its most recent payout hike was a 1% year-over-year bump across its interim and final payouts in 2022.

Would-be investors in the European Dividend Aristocrats should know that the company is going through a leadership transition. UUGRY announced last year that CEO Steve Mogford would step down in early 2023, and this year, United Utilities announced his departure would come on March 31. Louise Beardmore, formerly the customer service and people director, has become UUGRY's CEO designate.

Sika 

• Dividend yield: 2.3%
• Consecutive annual dividend increases: 11

Sika AG (SXYAY, $27.93) is a Swiss multinational specialty chemicals company that develops systems and products for the building and motor vehicle industries. So, for example, its automotive-focused products include exterior adhesives, paint shop sealants and body shop structural inserts. And its building products go into the production of windows, doors, flooring, facades and more.

A potential growth opportunity for Sika is the decarbonization of those two industries. For instance, in 2021, the company announced it had developed concrete admixtures using Limestone Calcined Clay Cement (LC3) technology, which lowers CO2 emissions. And its crash-resistant SikaPower structural adhesives help reduce not just car weight, but welding points in auto production, lowering energy input.

CFRA analyst Adrian Ng became more positive on the name in February: "We raise our recommendation on Sika to Buy from Hold with a higher target price of CHF315 (CHF270) … on the group's fast improving margins and better-than-expected activity in the construction industry," he wrote. "With strong results through 2021 and 2022, we turn more positive on Sika given the better-than-expected construction activity around the world going into 2023."

Sika is a member of the S&P Europe 350 Dividend Aristocrats by merit of 11 consecutive annual dividend increases. That includes a nice 10% upgrade to the payout in 2022, to 3.2 Swiss francs per share.

Smurfit Kappa Group 

• Dividend yield: 3.7%
• Consecutive annual dividend increases: 11

Ireland-based Smurfit Kappa Group (SMFKY, $36.48) is one of the world's largest paper packaging companies. Its list of products ranges from basic cardboard boxes and beer bottle carriers to confectionary cushion pads and adhesive and sealant cartridges.

The company enjoyed a banner 2022 that saw revenues jump 27% to 12.8 billion euros and earnings before interest, taxes, depreciation and amortization (EBITDA) soar 38% to 2.35 million euros. This all was despite slightly lower box volumes, which the group somewhat chalked up to "the partial reversal of the unsustainably high demand levels seen throughout the pandemic period."

That allowed Smurfit to approve a 12% YoY increase in the final 2022 dividend, to 107.6 euro cents per share. (Note: The interim dividend of 31.6 euro cents per share was 8% better than 2022's interim payout.) That raise marked 11 straight years of higher cash distributions for shareholders.

DSV

• Dividend yield: 1.0%
• Consecutive annual dividend increases: 12 

Danish transport and logistics company DSV (DSDVY, $92.11) gets things from A to B in just about every conceivable way. The company's solutions include any type of road transport, from local to international; rail freight; sea freight; air freight; and courier services. It even has tailored solutions for "oversized or complex cargo," boasting that it once transported a 35-meter transition piece for the Sheringham Shoal wind farm off the east coast of England.

On top of that, DSV also tackles logistics solutions such as warehousing and fulfillment.

2022 was a big year for DSV, which finalized the integration of Agility's Global Integrated Logistics business (GIL). This helped drive growth in gross profits (35%) and EBIT (47%) for its Solutions division. Overall, EBIT grew by 48% year-over-year in 2022.

As a result, the board approved a big 18% jump in the dividend, to 6.5 Danish krones per share – the firm's 12th consecutive payout increase, keeping up DSV's membership in the European Dividend Aristocrats.

Geberit

• Dividend yield: 2.4%
• Consecutive annual dividend increases: 12 

Sanitary technology group Geberit (GBERY, $54.98) deals in one of the least glamorous rooms in the home.

Geberit develops systems for wall-hung toilets, urinals and bidets, floor-mounted toilets, sink traps, tub fillers, flush plates, remote flush buttons and more. (And even urinals have reached the 21st century – the Geberit Control app allows you to program, monitor and maintain the company's Type 10 and Type 50 urinal plates!)

Unlike a few of the other European Dividend Aristocrats on this list, Geberit didn't enjoy a boffo 2022; profits were off slightly thanks to high raw material and energy prices, and EBITDA was down 15% year-over-year. Still, the company approved its 12th consecutive dividend increase – a modest 1% improvement to 12.6 Swiss francs per share.

Ashtead Group 

• Dividend yield: 1.3%
• Consecutive annual dividend increases: 15

Ashtead Group PLC (ASHTY, $251.05) is another decidedly unglamorous company, renting out construction and industrial equipment in the U.S., U.K. and Canada under the Sunbelt Rentals brand.

Even if you haven't heard of it, it's a massive player. With 1,056 stores in 48 states, it's the second-largest equipment rental company in North America. It also has another 113 stores in Canada, giving it an 8% market share there. And its 184-store U.K. division is the top dog there.

Ashtead's fortunes have turned brighter of late, prompting an upgrade by CFRA. "In the first nine months of FY23, AHT added 120 locations in North America. Management has upgraded FY23 guidance to 21%-23% rental revenue growth (from 18%-21%) and capex guidance to $3.5-$3.7 billion (from $3.3- $3.6 billion) but maintain free cash flow at around $300 million," says analyst Alan Lim Seong Chung. "AHT is now a Buy as we expect strong revenue growth of >20% in FY23 to more than offset the marginal EBITDA margin decline."

ASHTY provided a jumbo-sized dividend increase last year, with its 57.28-pence full-year dividend coming in a whopping 64% better than the prior-year's payout. That also marked 15 consecutive years of uninterrupted distribution growth for the European Dividend Aristocrat.

Fresenius Medical Care

• Dividend yield: 3.5%
• Consecutive annual dividend increases: 25 

Were Fresenius Medical Care (FMS, $20.06) a member of the S&P 500, it would be eligible for U.S. Dividend Aristocracy given its quarter-century of annual dividend growth.

Germany-based Fresenius Medical Care is the world's top provider of products and services for people with renal diseases (read: kidney ailments). The company boasts some 345,000 patients across its 4,100-plus dialysis clinics in roughly 150 countries.

Truist analyst David MacDonald recently weighed in on an improving environment for the stock:

"FMS has a number of strategic initiatives in place to help streamline the business, improve margins and increase returns," he says. He maintains a Hold rating on the stock, but he notes that "while the environment remains difficult and execution is key, we have raised our target to $22 (vs. prior $17) to reflect some improvement in headwinds and announced initiatives, which should aid performance."

The company's 25th consecutive dividend was OK'd in 2022 – an admittedly token increase of less than 1% to 1.35 euros per share. Still, FMS generates plenty of income, doling out a large 3%-plus yield that's roughly two times what the S&P 500 offers.

Novo Nordisk 

• Dividend yield: 1.9%
• Consecutive annual dividend increases: 26 

For Americans, Novo Nordisk (NVO, $147.29) might be among the most recognized of the European Dividend Aristocrats. It boasts numerous diabetes medicines (including more than a dozen different insulins), as well as treatments for hemophilia, growth disorders and obesity. Novo Nordisk also offers several hormone treatment therapies.

One of Novo's most potent drivers is Wegovy – an obesity treatment competing with the likes of Eli Lilly's (LLY) Mounjaro. "While Mounjaro continues to grow slowly, Novo's Wegovy has seen rapid uptake over the past two weeks, increasing 15.1% this week and 7.2% the previous," BMO Capital Markets analyst Evan David Seigerman recently noted. Last year, Novo doubled its 2025 sales target for obesity medicines in part because of strong optimism in Wegovy.

Healthcare stocks like Novo are much like utilities and consumer staples in that their products are always in demand, no matter the economic environment. That helps them pay steady and rising dividends – and Novo is no exception. The company has delivered 26 consecutive annual dividend increases so far. And during its Q4 2022 earnings call, the company said that at its March 23 annual general meeting, it will propose a final dividend of 8.15 kroner for a total 2022 dividend of 12.44 kroner – a 19% year-over-year increase. That would mark NVO's 27th year of higher payouts.

Fresenius SE

• Dividend yield: 3.7%
• Consecutive annual dividend increases: 29

If Fresenius SE (FSNUY, $6.52) sounds a little familiar … well, it should. It bears the same name as its previously mentioned division: Fresenius Medical Care.

Fresenius owns a roughly 32% stake in FMC. And, as of right now, FMC is considered one of Fresenius's subsidiaries – but the company plans to change that within a few months, deconsolidating FMC into a German stock corporation. 

There'll be plenty of company left, though. Fresenius's other divisions includes Fresenius Helios, Germany's largest hospital operator; Fresenius Kabi, which supplies drugs, medical devices and clinical nutrition products; and Fresenius Vamed, a healthcare facility manager.

Like many other European dividend stocks, Fresenius SE tries to link its dividend to its profits, broadly maintaining a payout ratio of 20% to 25%. Last year, the company approved a 5% hike to the payout, to 92 euro cents per share – putting it one year away from three decades' worth of consecutive dividend hikes. It also started offering a scrip dividend, which allows investors to receive dividends in the form of new shares.

SAP 

• Dividend yield: 1.7%
• Consecutive annual dividend increases: 30

Another of the European Dividend Aristocrats with some brand awareness in the states is German multinational software company SAP (SAP, $123.48).

SAP's solutions span financial management, business technology, customer relationship management, enterprise resource planning, supply chain management and more. And SAP is everywhere – the firm notes its customers include 99 of the 100 largest companies in the world and generate 87% of total global commerce ($46 trillion).

The tech stock has a decent bull camp among the analyst crowd, though Argus Research's Joseph Bonner (Hold) offers up a warning.

"As SAP moves past the fallout on its business from the Russia-Ukraine war, it continues to confront a shaky macroeconomic environment leading to hesitant technology customers," he says. "SAP has set ambitious targets over the next few years even as the business environment remains uncertain."

Regardless, SAP is one of the best dividend growth stocks and its payout should continue to grow. Its supervisory and executive boards have recommended a 5% increase to the dividend, to 2.05 euros per share. Shareholders will have their say during the annual meeting on May 11.

Today, central banks are acting more aggressively than ever before to stave off deflation and spur global growth. The European Central Bank, the People's Bank of China, the Bank of Japan, the Bank of England and the Federal Reserve have all embarked on quantitative easing (QE) programs following the 2008 financial crisis.

QE has pushed interest rates down around the world and is forcing investors to get creative as they search for yield. Traditionally, clients have relied on a combination of Social Security benefits, pension income and interest from a conservative fixed income portfolio to support them in retirement. Even as the Fed makes moves to slowly increase rates, while they're so low, you must decide whether to: (a) reduce your living expenses; (b) take on more credit risk by purchasing lower quality, higher yielding investments; or (c) increase your allocation to dividend-paying equities to meet your cash flow needs. The further out you go on the risk spectrum, the higher the potential volatility and risk of loss.

Understanding how the Fed works will help you navigate this low rate environment.

Fed History & Structure

Created on December 23, 1913, the Fed is the governmental agency that determines monetary policy. Unlike most government entities, the Fed is set up as an independent agency that is supposed to be insulated from political influences. Its responsibilities include supervising and regulating banking institutions, maintaining stability of the financial system and providing financial services to depository institutions, the U.S. government and foreign official institutions.

The Fed is governed at both the national and local levels. At the national level is the Board of Governors (also known as the Federal Reserve Board). The Board is comprised of seven individuals appointed by the President and confirmed by the Senate. These Governors serve 14-year terms and are led by a Chairperson and Vice Chairperson, who each serve four-year terms and may be reappointed.

At the local level, there are 12 Federal Reserve Banks, each one led by a bank President: New York, Boston, Philadelphia, Cleveland, Atlanta, Richmond, St. Louis, Chicago, Kansas City, Minneapolis, Dallas and San Francisco. These banks carry out the day-to-day operations of the Federal Reserve System, including moving currency into and out of the system, issuing and redeeming government securities and providing checking accounts for the Treasury.

The seven Board Governors, the President of the Federal Reserve Bank of New York and four of the remaining 11 Reserve Bank Presidents, who serve one-year terms on a rotating basis, make up the Federal Open Market Committee. The FOMC meets eight times per year and is the monetary policymaking body of the Federal Reserve System.

Dual Mandate

The Fed has two main goals, often referred to as the "dual mandate:" (1) guide our economy towards full employment; and (2) maintain price stability (i.e. inflation levels). An economy that is growing too slowly or too quickly can cause all sorts of unintended consequences such as inflation, deflation, unemployment and speculation. When the Fed feels that the economy is growing too quickly or too slowly based on the myriad data they follow, they will adjust the money supply and ultimately interest rates using the following tools:

1. Open Market Operations: The Fed buys or sells securities, usually Treasury bills, to increase or decrease the amount of money held at Federal Reserve banks. When they buy securities, the money they pay for the securities goes into the banks and serves to increase the money supply. The opposite effect takes place when they sell securities. Basic economics instructs us that if supply falls and demand remains constant, all else being equal, then prices will increase. In this case, price is the cost of borrowing money (interest rates). QE is like open market operations on steroids.

2. Discount Rate: As the lender of last resort, the Fed can step in to provide banks with short-term funding to help meet liquidity requirements. The cost of borrowing money from the Fed is the "discount rate" and can be raised or lowered by the Fed to increase or decrease liquidity in the banking system. Historically, if a bank had to use the discount window, it was viewed as a signal that the bank was in trouble.

3. Reserve Requirements: Banks are required to keep a percentage of their deposits in cash or in an account at a Federal Reserve Bank to meet liquidity needs. The amount they are required to keep is called the "reserve requirement" and is set by the FOMC.

Why Is the Fed Funds Rate Important?

The Federal Funds Rate is the interest rate that banks charge one another for overnight loans. While financial media often talk about the Fed setting the Federal Funds Rate, they actually do not set that rate. They set a target range, currently between 0.25% and 0.50%. Banks use the Fed Funds rate as the basis for setting their prime rate (the rate they charge their best customers), mortgage rates, rates on auto loans, certificates of deposit, credit cards and savings accounts. Movements in the rate are widely followed. As we have seen in recent years, low interest rates can drive consumer spending and increase prices across a range of asset classes.

With short-term interest rates near zero in many countries, even negative in some, central banks have increased the size of their securities purchases and started to purchase securities with longer-term maturities. Their goal is to try to lower long-term interest rates. These monetary policy initiatives have never been used before, and their effectiveness is yet to be determined. With no fiscal policy measures on the horizon, the responsibility for steering the global economy lies in the hands of central banks. As an investor, you need to decide how much risk you're willing to take to navigate what may come.

Bryan Koslow, MBA, CFP®, CPA, PFS, CDFA™ is the President of Clarus Financial Inc., an Integrated Wealth Management firm with offices in NYC & NJ.

Securities and advisory services offered through Commonwealth Financial Network®, Member www.finra.org / www.sipc.org, a Registered Investment Adviser. Please review our Terms of Use.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The Greek crisis may have disappeared from the headlines, but the bitter taste of the recent confrontation between Greece and the rest of Europe will last for some time.

In taking a hard line against Greek demands that more debt be forgiven, the European Union noted that Portugal, Spain and Ireland met the reform and payment deadlines set forth in their earlier debt crisis agreements. In response, the Greeks stated that they had already suffered a 25% drop in gross domestic product over the past five years, far greater than the decline experienced by any other European economy. Furthermore, the Greeks reminded the Germans that despite Germany’s brutal occupation of their homeland during World War II, the Allies forgave 50% of Germany’s debt in 1953—implying that Greece should be granted similar debt forgiveness.

But a closer look reveals the weaknesses in Greece’s arguments. After Greece adopted the euro in 2001, a flood of cheap capital sparked a huge economic boom. Land and housing prices increased, profits rose smartly, and the labor market tightened. Workers were able to demand sharply higher wages, and businesses flush with funds granted those demands. At the same time, the government increased the benefits in an already overly generous pension system. From 2000 to 2007, Greek GDP expanded by nearly 58%, far more than that of any other European country.

When the financial crisis struck, lenders pulled back and the good times quickly ended. As Warren Buffett has observed, when the tide goes out, you find out who has been swimming naked. By 2009, Greece was exposed without even a fig leaf. Wages were far too high to be competitive, and the country’s debt, barely serviceable in good times, could not be refinanced at the higher interest rates lenders demanded.

Greece’s economy contracted much more than that of any other European country. But Greece’s claim that it suffered more must be viewed in comparison with the preceding boom. Despite the huge economic contraction, Greek GDP is more than 25% higher than in 2001, a better performance than Spain, Portugal or Italy.

Why couldn’t the Europeans forgive some of Greece’s debt, as the Allies did for Germany after World War II? They already have! The agreements negotiated over the past several years to extend loan maturity and sharply lower the interest rates that the Greeks had originally agreed to pay are equivalent to writing off about half of the Greek debt.

Fatal mistake. Prime Minister Alexis Tsipras made the fatal mistake of thinking he could bully Greece’s creditors into accepting his demands and still stay in the eurozone. But without extensive cash advances from the European Central Bank, Greece was forced to close its banks. Those hastily arranged closures have caused severe economic hardships and will hamper any economic recovery. Who will put money in Greek banks knowing that they could close again? The Greeks cannot rebuild trust in their financial institutions without extensive guarantees by the ECB, which will be granted only after a painful restructuring of Greece’s financial system.

Despite the recent friction, I believe the eurozone is stronger after putting down the Greek rebellion. Even with the ECB’s massive program of buying bonds to bring down interest rates, the euro has emerged from the Greek crisis with considerable strength.

Sound finance and fiscal responsibility do pay off in the long run. It’s not a coincidence that Germany is the richest country in the European Union. Greece will eventually pull out of its slump. But its current hardships are of its own making, not those of European hard-liners.