10 Stocks the Best European Equity Income Fund Managers Have Been Buying

At the index level, 2026 has not been a particularly strong year for European dividend strategies. The Morningstar Europe Dividend Yield Focus Index has returned just 1.8% year to date in EUR terms, well below the 4.8% gain delivered by the broader Morningstar Europe Index.

However, the picture changes considerably when looking at actively managed funds. The average fund in the Europe Equity Income category has generated a 6.8% return year to date, outperforming both the dividend-focused index and the broader European equity benchmark. This suggests that active managers within the European income space have been more successful in adapting their sector exposure to this year’s market trends.

Where has the “smart money” been finding investment opportunities?

To find out, we looked at the latest portfolios of some of the best fund managers. To isolate the top stock-pickers among current active fund managers, we screened for the following:

• Actively managed funds in the Europe Equity Income
  Morningstar Category
  .
• Funds with at least one share class earning a
  Morningstar Medalist Rating
  of Gold, Silver, or Bronze.
• Funds that hold 100 stocks or fewer as of their most recently reported portfolios.

In total, nine separate fund portfolios passed our screen. We then compared the latest portfolios of these funds with their portfolios three months before to determine which stocks these managers have been buying.

10 Stocks That the Best Fund Managers Have Been Buying Lately

Here are some of the stocks that top managers have been investing in during the past few months:

1. TotalEnergies TTE
2. Siemens SIE
3. Partners Group PGHN
4. Nestlé NESN
5. Redeia Corporacion RED
6. Aena, S.M.E. AENA
7. Engie ENGI
8. Naturgy Energy Group NTGY
9. Iberdrola IBE
10. Amadeus IT Group AMS

Some of the stocks that top managers have been buying look fairly valued or overvalued today, according to Morningstar, but there are undervalued stocks in the mix as well.

Here’s a little bit about each of the stocks the best fund managers have been buying, along with some commentary from the Morningstar analysts who follow the companies. All data is as of May 8, 2026.

TotalEnergies

• Number of Best Managers Buying the Stock: 4
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : None
• Sector
  : Energy

The best fund managers’ top stock pick during the last quarter was TotalEnergies, the only energy name on the list. Morningstar thinks this large-value stock is fairly valued.

TotalEnergies’ strategy to grow total energy production while pursuing its ambition of net-zero emissions by 2050 sets it apart from peers who are not growing as rapidly, have abandoned or modified their emissions targets, or both. More specifically, Total is growing oil production, something its larger European peers can’t do, and continuing to invest in renewable power and low-carbon assets, an area where they’ve retreated.

Hydrocarbons, including oil production, liquefied natural gas, and downstream activities, will continue to attract the bulk of investment. Management is focused on returns and capital discipline, evaluating hydrocarbon projects based on a $50/barrel price and investing only in those with an aftertax breakeven below $30 per barrel. Hydrocarbon production will grow about 3% per year through 2030, primarily driven by LNG production. Oil volumes will come from short-cycle projects, continued growth in Brazil, new projects in Africa, and recent exploration successes in Suriname.

After losing Russia LNG project growth, Total backfilled its project queue with new opportunities in Qatar. Combined with projects in the US, Mexico, Nigeria, and Mozambique, as well as new third-party offtake, Total aims to grow its LNG portfolio by 50% to 60 million metric tons per year by 2030.

Total is investing in improving downstream operating performance and in growing chemical production, while also reorienting its assets for the energy transition, including biofuels production and plastics recycling. It will focus on its retail assets in France and Africa, as well as lubricants, while selectively growing electric vehicle charging in Europe. Over time, the business will reduce reliance on petroleum-related revenue.

It’s investing in power generation capacity, primarily solar and combined-cycle gas plants, to more than double its electricity generation to 100-120 terawatt-hours by 2030. It will invest some 25% of total spending through 2030 in low-carbon energy transition businesses and expects the integrated power portfolio to earn returns of 12% returns by 2030, a level comparable with returns in its oil and gas business at $60/bbl.

Read more about TotalEnergies here.

Siemens

• Number of Best Managers Buying the Stock: 4
• Morningstar Rating
  : ★★
• Morningstar Economic Moat Rating
  : Wide
• Sector
  : Industrials

Next on the list of stocks that the top managers have been buying is Siemens, one of two industrials names on the list. Morningstar thinks this large-core stock is 18% overvalued.

Siemens is a disparate portfolio of high-quality businesses across various sectors. The Siemens Energy spinoff has sharpened returns and lowered cyclicality, while ongoing monetization of the Siemens Healthineers stake to fund software acquisitions raises questions about the long-term role of the remaining holding. All its businesses have strong product portfolios to compete in long-term, attractive end markets that benefit from the secular growth trends of digitalization and the energy transition. In addition, its installed base of long-life industrial equipment requires a constant stream of aftermarket upgrades and maintenance, underpinning its high-single-digit earnings growth ambition.

Siemens was early to identify the convergence of industrial hardware and software markets, having acquired UGS in 2007 to establish itself as a leading competitor in the fast-growing industrial software market. Since then, further acquisitions and significant investment in research and development have solidified its leading positions. Its in-house digital capabilities have helped lower the cyclicality of the group through more recurring revenue streams and created more meaningful customer relationships. The acquisitions of Altair and Dotmatics in 2025 demonstrate Siemens’ ambitions to expand on its industrial software strategy.

The smart infrastructure segment is a direct beneficiary of the multidecade energy transition and decarbonization secular growth themes. Approximately 45% of segmental revenue is generated from data-rich software, systems, and solutions that help improve the performance of customers’ buildings, infrastructure, and manufacturing plants. The segment is also well positioned for a growing share of renewables in the energy mix through its range of grid automation solutions that are designed to enhance the efficiency and reliability of electrical grids. Data center exposure is below 5% at the group level, considerably lower than its peers.

The reduction of its investment in Siemens Energy (now below 15%) means it no longer creates volatility in its financial statements.

Read more about Siemens here.

Partners Group

• Number of Best Managers Buying the Stock: 2
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : Narrow
• Sector
  : Financial Services

Asset management firm Partners Group is one of six large-core names on the list. Morningstar thinks shares of this stock are 28% undervalued.

Most private market firms focus on dealmaking, with less consideration of clients’ risk/reward or liquidity needs. Partners Group took a different approach. Around 40% of its assets under management comes from separately managed, bespoke mandates developed for large institutional clients, where it has the investment, capital market, and legal expertise to structure creative alternative vehicles. Partners Group is also one of the pioneers and market leaders in semiliquid funds that enable individual investors to get exposure to private market investments. Semiliquid funds account for around 30% of AUM. For both mandate and semiliquid clients, Partners Group offers relative value strategies that allow it to make tactical asset allocation decisions across the full spectrum of private market assets: private equity, private credit, real estate, and infrastructure.

We expect investors to continue allocating a greater share of their assets to private markets. Higher historical returns and portfolio diversification are the main attractions. At the same time, limited partner investors want to reduce the number of funds they invest in. Partners Group’s one-stop-shop solution positions it well to increase its market share during this industry consolidation.

Initially, Partners Group allocated most of its clients’ assets to primary investments, or funds raised by other firms. Now it invests the bulk of its assets in its own funds, which should lead to more revenue from carried interest than in the past.

Higher interest rates have dampened returns and slowed dealmaking activity. Partners Group is known as a mid-market specialist. Mid-market buyout funds tend to use less leverage, which should make Partners Group less susceptible—but not immune—to higher rates.

As long as investor demand exceeds the supply of private market assets, we do not expect pressure on fee margins. In the long term, we see pressure building. The outperformance of private markets over public markets is narrowing, making it harder to justify its significantly higher fees. Regulators will also take a keener interest in private market fees as the asset class opens up for more retail investors.

Read more about Partners Group here.

Nestlé

• Number of Best Managers Buying the Stock: 2
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : Wide
• Sector
  : Consumer Defensive

Next on the list of stocks that the top managers have been buying is Nestlé, the only consumer defensive name on the list. Morningstar thinks this large-core stock is 12% undervalued.

Nestle has faced challenges in delivering volume growth in recent years, largely due to multiple rounds of sizable price increases that have weighed on consumer sentiment, coupled with operational shortcomings. These included underwhelming innovation efforts, inconsistent execution with market share losses in some key business areas, and insufficient marketing investment behind strategic priorities.

The packaged food sector is becoming increasingly commoditized, and we see a risk that price competition may continue to weigh on Nestle’s sales growth. Global consumer products companies face growing competition from smaller, local, more agile competitors. Additionally, private-label products are becoming increasingly mainstream, offering a compelling value proposition.

Recognizing these challenges, Nestle’s new management, appointed in 2024, is taking steps to accelerate top-line growth with interventions focused on reestablishing product differentiation across categories, addressing underperforming business areas in a systematic way, and pursuing more targeted and meaningful innovation. These efforts will be supported by increased marketing investment, which is set to reached around 8.6% of sales in 2025 and expected to stay at this level beyond (compared with an average of 7.5% of sales in 2022-24). This investment will be funded by a three-year cost reduction program aimed at delivering CHF 3 billion in incremental cost savings by the end of 2027.

While these measures might take some time to reinvigorate volume growth across underperforming business areas, prudent research and development and marketing investment should help Nestle better align its product portfolio with rapidly evolving consumer trends. Additionally, population growth, urbanization, and economic growth are secular drivers in emerging markets that should support medium-term volume growth, though at a lower level than historical averages.

Read more about Nestlé here.

Redeia Corporacion

• Number of Best Managers Buying the Stock: 2
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : None
• Sector
  : Utilities

Regulated electric company Redeia Corporacion is the only mid-value name on the list. Morningstar thinks shares of this stock are 13% undervalued.

Redeia operates Spain’s electricity transmission grid. It is also involved in some noncore businesses like transmission lines in Brazil and a fiber-optic telecom network in Spain.

The pretax allowed return of Spanish regulated networks was cut from 6.5% to 6% in 2020 and to 5.58% in 2021. Unlike all regulatory regimes in Western Europe, the Spanish regime does not allow indexation to inflation. This, combined with the end of the remuneration of pre-1998 assets in 2024, has driven falling earnings since 2021. In December 2025, regulator CNMC lifted the allowed return to 6.58%, below the 7%-7.5% claimed by companies. Also, the efficiency incentives mechanism will be much less favorable than that between 2020 and 2025.

Soaring renewable capacity in Spain and the construction of new transmission lines between some Spanish islands and France and Spain are driving a massive step-up in Redeia’s investments. The firm has revised upward its 2021-25 investment budget every year since 2023.

For 2026-29, Redeia guides to EUR 6 billion of investments in Spanish transmission compared with above EUR 13 billion in Spain’s draft 2025–30 grid plan. The gap reflects permitting constraints and the long lead times of large grid projects, with only EUR 9–EUR 10 billion of the plan expected to be commissioned by 2030 and EUR 2 billion pushed into 2030–31. The firm guides for EBITDA and net profit with a 2026-29 CAGR above 5% and around 3%, respectively.

Redeia plans to increase its dividend by 2% annually through 2027, implying a dividend of EUR 0.87 that year. Unlike most regulated peers, Redeia does not intend to tap the stock market to fund its investment plan.

Read more about Redeia Corporacion here.

Aena, S.M.E.

• Number of Best Managers Buying the Stock: 3
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : Wide
• Sector
  : Industrials

One of six 4-star names on the list, Aena, S.M.E. is trading 13% below its fair value estimate. This air services company belongs to the large-core segment of the style box.

Aena is the world’s largest listed airport operator. It has a natural monopoly managing Spain’s entire airport network. Established in 1991, it is majority owned by the Spanish government through Enaire (51%), with the remaining 49% publicly listed since 2015. It plays a critical role in the national economy, acting as the primary gateway for Spain’s massive tourism sector.

Aena’s Spanish operations are governed by DORA, a five-year framework that sets maximum revenue per passenger, quality standards, and mandatory investments. Spanish airports operate under a dual-till model, whereby the regulated asset base is allowed to earn its cost of capital, while commercial and real estate activities are left completely unregulated.

The current DORA II agreement expires in 2026. For DORA III (2027-31), Aena has proposed a transformational investment program of nearly EUR 13 billion, including EUR 10 billion toward the regulated asset base. In addition, much of its announced EUR 3.2 billion Barcelona Airport expansion is expected to fall under DORA IV. In return, it expects a higher regulated weighted average cost of capital, which together with a growing regulated asset base would support material increases in aeronautical charges.

While there is broad political backing for Aena’s proposal, regulator CNMC has yet to publish its opinion, and airlines are vocally opposed to the path for aeronautical charges. The issue is that Aena’s DORA III proposal forecasts slower passenger growth over the period due to capacity constraints at its busiest airports. Airline associations argue that Aena systematically underestimates traffic forecasts when negotiating DORA frameworks and has historically generated excess regulated revenue.

Aena has developed a significant international footprint with controlling stakes in the London Luton, Leeds Bradford, and Newcastle airports in the UK and the ANB, BOAB, and Rio Galeão concessions in Brazil. Aena also maintains an equity stake in Grupo Aeroportuario del Pacifico.

Read more about Aena, S.M.E. here.

Engie

• Number of Best Managers Buying the Stock: 2
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : None
• Sector
  : Utilities

Utilities company Engie is one of three large-value names on the list. Morningstar thinks shares of this stock are 13% undervalued.

Engie is the third-largest European utility after Enel and Iberdrola. Historically a gas utility, Engie lacked exposure to electricity networks that are growing fast now due to high investments needed to accommodate renewables expansion. It reduced its shortfall with the GBP 15.9 billion acquisition of UK leading electricity distribution networks company UKPN announced in February 2026. Electricity networks should contribute to around 15% of the group’s EBIT by 2028 versus 8% in 2024. Gas networks’ EBIT contribution will remain dominant at around 25% of the 2028 EBIT.

Renewables should be the largest earnings contributor by 2028. With 28 gigawatts of consolidated wind, solar, and battery energy storage systems at the end of 2025, Engie is the third-largest renewables developer in Europe behind Enel and Iberdrola. It plans to install 4 gigawatts annually, representing a good chunk of the group’s investments. BESS will account for 5%-10% of the growth investments. The company aims to achieve double-digit returns from those investments, way above wind and solar. On the flip side, BESS has less earnings visibility due to a higher merchant exposure.

Merchant exposure is made up of gas plants in Europe, Belgian nuclear plants, and French hydropower assets. Nuclear and hydropower are exposed to European power prices, but most of the Belgian nuclear plants were shut down in 2025. Taking that into account, the valuation sensitivity to a EUR 10 change in power prices is EUR 1.10 per share, or 3.5% of our fair value estimate, close to the median of European utilities we cover.

The total nuclear waste management provisions were transferred to the Belgian government in exchange for EUR 16 billion of payments by Engie in 2025. This considerably derisked the equity story.

The dividend is based on a 65%-75% payout ratio. Record profits posted between 2023 and 2024 drove a surge in the dividend. It decreased by 9% in 2025 in the wake of earnings normalization. Conversely, upcoming profit growth driven by UKPN and renewables capacity additions should underpin a 6.1% dividend CAGR by 2030.

Read more about Engie here.

Naturgy Energy Group

• Number of Best Managers Buying the Stock: 1
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : Narrow
• Sector
  : Utilities

One of two 3-star names on the list, Naturgy Energy Group is trading 7% below its fair value estimate. This regulated gas company belongs to the large-value segment of the style box.

Naturgy owns and operates around 70% of the gas distribution network, and it’s the third largest electricity distributor operator in Spain. In the gas business, the company has historically generated economic profits, delivering double-digit returns that consistently exceeded the regulator’s allowed levels. Naturgy has been unable to replicate this return profile in its electricity distribution activities, where it has a more limited scale. In addition, rising capital investments in Spain’s power grid are inflating the accounting value of its regulated asset base, narrowing the spread between book returns and those permitted by the regulator.

Following the remuneration cuts implemented in 2021, the new regulatory period starting in 2026 is expected to restore more attractive allowed returns for both businesses, which have been proposed at 6.5%, up from 5.8% for gas and 5.6% for electricity. Naturgy also operates gas and electricity distribution networks in several Latin American countries, where returns are typically higher than in Spain and indexed to inflation. Overall, regulated distribution networks account for more than half of the group’s EBIT.

Since 2021, Naturgy has adjusted its capital allocation strategy several times. After paying a high dividend with an average payout ratio of 120% between 2018 and 2022, the company cut its dividend to focus on renewables. However, in 2023, it sharply reduced renewables spending amid industry headwinds, cutting it further in 2025 while raising the 2024 dividend by 14% and targeting 6% annual dividend growth through 2027. This reallocation has shifted planned capital expenditure through 2027 more heavily toward networks, emulating peers.

Naturgy used to stand out from most European utilities due to its limited free float of 11.9%, which has fueled speculation about potential delisting. In March 2025, the company launched an EUR 2.3 billion tender offer to repurchase 88 million shares from its reference shareholders at EUR 26.50 per share. It later reintroduced those shares to the market at the same price, adjusted for dividends, increasing the free float to 18.7% and re-entering the MSCI indexes in November.

Read more about Naturgy Energy Group here.

Iberdrola

• Number of Best Managers Buying the Stock: 5
• Morningstar Rating
  : ★★
• Morningstar Economic Moat Rating
  : None
• Sector
  : Utilities

Next on the list of stocks that the top managers have been buying is Iberdrola, one of four utilities names on the list. Morningstar thinks this large-core stock is 12% overvalued.

Iberdrola is the second-biggest integrated utility in Europe after Enel. Besides its domestic Spanish market, Iberdrola has strong exposure to the United Kingdom since the acquisition of Scottish Power in 2007. It is the European utility with the second largest exposure to the United States after National Grid thanks to its wind development and the acquisition of UIL in 2015. Its US assets used to be grouped in subdsidiary Avangrid that Iberdrola delisted in 2024.

Iberdrola boasts one of the largest onshore wind portfolios in the world with 21 gigawatts of capacity, mostly in the US, Spain and the UK. Renewable project revenue tends to be relatively secure through power purchase agreements. Iberdrola is also one of the largest offshore wind players with 2.5 gigawatts of installed capacity and 3.4 GW under construction at the end of 2025.

Since 2022, Iberdrola has been trimming its renewables investments in favor of networks that will account for 60% of investments by 2028. Consequently, networks’ share of the group’s EBITDA will climb from 50% in 2025 to 57% in 2028. Networks are located in the UK, the US, Spain, and Brazil. Iberdrola intends to focus its investments in the US and UK. The latter has one of the most favorable regulatory regimes in Western Europe, and returns of electricity transmission networks were raised for the 2026-31 RIIO-T3 regulatory period. In 2024, Iberdrola increased its exposure to this market by acquiring Electricity North West, an electricity distribution company. Brazil boasts high allowed returns to compensate for the risks inherent in an emerging market. Spain has an unfavorable regulatory environment due to the delayed and uncertain pass-through of inflation. However, allowed returns were raised for the 2026-31 regulatory period.

The group’s business mix focused on networks and renewables with a strong footprint in the US and the UK, a balanced geographical exposure, and limited exposure to merchant power prices delivers steady earnings and dividend growth.

Read more about Iberdrola here.

Amadeus IT Group

• Number of Best Managers Buying the Stock: 2
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : Narrow
• Sector
  : Technology

Amadeus IT Group rounds out the list of stocks that the best fund managers have been buying. Morningstar thinks shares of this stock are 26% undervalued.

Although Amadeus’ demand has been affected by uncertain economic and geopolitical conditions recently, we expect its leadership position in global distribution systems to endure, driven by its leading network of airline content and travel agency customers as well as its healthy position in software solutions for these carriers and agents. Amadeus is the largest of the three GDS operators (narrow-moat Sabre is second, followed by privately held Travelport) that control nearly 100% of market volume.

Amadeus’ GDS enjoys a network effect, the source of its narrow moat. As more supplier content (mostly airline content) is added, more travel agents use the platform; as more agents use the platform, suppliers offer more content. This network advantage is solidified by technology that integrates GDS content with back-office operations of agents and IT solutions of suppliers, leading to more accurate information that is also easier to book and service the end customer with. The acquisitions of airline IT company Navitaire in 2016 and hotel IT company TravelClick in 2018 expanded Amadeus’ GDS network advantage through new customer integration, as Navitaire focuses on low-cost carriers while Amadeus’ existing Altea division focuses on full-service carriers, and TravelClick has a midscale lodging presence versus Amadeus’ legacy hotel offering, which focuses on enterprises.

We believe Amadeus’ platform is the foundational layer agentic artificial intelligence will use. Since the 1980s, Amadeus’ proprietary rules and logic infrastructure have processed billions of complex transactions (150,000 per second) through hundreds of intricate partner connections with response times in the nanoseconds, while providing service that is hard for AI bots to replicate.

Read more about Amadeus IT Group here.

How Do We Determine Which Stocks the Best Managers Are Buying?

To determine which stocks top managers are investing in, we compared the latest portfolios of these funds with their portfolios three months before. We then calculated a “buy score” for each stock, which is a weighted average that allows us to make apples-to-apples comparisons of the most purchased stocks. One or two managers making large purchases of a stock could lead to the same buy score as many managers purchasing small amounts of a stock.