Firms reel from China's cooling love for luxury brands, but up dividends

The luxury goods industry has suffered from slowing Chinese demand, while terror attacks worldwide have hurt tourism and travelers' spending on luxury items this year.

But even with falling earnings growth and sales that UBS Group AG warns may worsen, many luxury goods makers have increased their dividends in a bid to lure investors, Societe Generale SA analysts wrote in note last month.

The strategy hasn't worked in the past year, with a Morgan Stanley index of shares tracking firms with high and sustainable payouts slumping 16 percent, three times more than the Stoxx Europe 600 Index.