BlackRock's Zoellinger backs European mid caps for dividends

Andreas Zoellinger, co-manager of the BlackRock Continental European Income fund, is backing mid-caps for dividends as valuations in some larger companies become overstretched.

Despite lower valuations relative to UK and US peers, Zoellinger suggested some sectors in Europe are already becoming fully valued, forcing managers look further down the market capitalisation scale. One of the mid-cap stocks in his portfolio is Kone, a lift manufacturer paying a 2.9% dividend, which makes up 3.3% of the fund. "There is space for dividend growth in mid-caps, and companies like Kone are still net cash and have a target total shareholder return," Zoellinger (pictured) said. The manager is also shifting from more expensive areas, such as consumer staples, into sector...