Hey there! If you follow my blog, you know I’m a huge fan of US companies that shell out dividends with the regularity of a Swiss watch. However, in 2026, we find ourselves facing a paradox: while many of these companies are thriving, we European investors are watching our Euro-denominated payouts get a lot leaner.
The reason? The dollar’s slump. When you invest in US stocks, you aren’t just buying a piece of a company; you’re also buying the currency it’s traded in.
The Translation Effect: Why Your Dividends Are “Shrinking”
The mechanism is simple but ruthless. If a US company pays a $100 dividend, the amount that hits your bank account depends entirely on the $EUR/USD$ exchange rate.
- Scenario A (Strong Dollar): Exchange rate at 1.05. Your $100 is worth roughly €95.
- Scenario B (Weak Dollar): Exchange rate at 1.20 (as we’re seeing in early 2026). Your $100 is now worth only €83.
Without the company cutting a single cent from its payout, you’ve lost nearly 13% of your purchasing power solely due to the exchange rate.
Real-World Examples: “Dividend Kings” Under Pressure
Let’s look at how this impacts some famous stocks known for their hefty and consistent dividends.
| US Stock | Sector | Estimated Dividend Yield (2026) | Impact on European Investors |
| Verizon (VZ) | Telecoms | ~6.5% | The generous yield is eroded by the Euro’s appreciation, cancelling out part of the “premium.” |
| Realty Income (O) | Real Estate (REIT) | ~5.8% | Since this is a monthly payer, the dollar’s decline reduces your real cash flow every single month. |
| ExxonMobil (XOM) | Energy | ~3.3% | Even if the company raises its dividend, for us, the payout remains flat or even drops in Euro terms. |
The Silver Lining: The “Natural Hedge”
It’s not all doom and gloom. Many of these multinationals (think Coca-Cola or Apple) generate a huge chunk of their revenue outside the US. When the dollar drops, their foreign profits are worth more when they bring them back home. This often leads to a stock price increase or future dividend hikes, which can offset the currency loss in the long run.
What Should You Do as an Investor?
If you’re a long-term investor, don’t panic. Currency cycles come and go. Here are three tips:
- Diversify: Don’t just bet on the US; look at European dividend champions (like Enel or Allianz) that pay directly in Euros.
- Euro Hedged ETFs: If you want to eliminate currency risk, there are “Euro Hedged” versions of US dividend ETFs.
- Accumulate: If you believe the dollar will bounce back in a few years, you are technically buying US assets “at a discount” right now.
