The months of June and, above all, July are typical months of dividend payments. Even in the years of the covid crisis, many listed companies tried to maintain the level and rewarded their shareholders on these dates.
Although most of the listed companies have recovered their pre-covid shareholder policy, there are still sectors unable to make these payments again, while a new threat of recession appears on the horizon. In the midst of uncertainty, the key to this year’s improvement in shareholder remuneration lies above all in the important contribution made by the banking sector after the forced stoppage imposed by the ECB in the midst of the covid crisis, a ban that was lifted in October 2021.
Two years after the start of the crisis caused by the pandemic and without the risk of recession having yet impacted on earnings forecasts, listed companies want to recover shareholder remuneration policies and most of them are achieving it. So much so that in the coming weeks, companies will disburse close to 5,000 million euros, to which if the almost 1,000 distributed by Telefónica on the 17th are added, it will be around 6,000 million.
Patricia García, founding partner of MacroYield, explains that “with inflation at high levels and with the expectation that it will remain at very high levels for a prolonged period, many investors seek refuge in dividends, since they have traditionally provided protection. Companies know that the dividend becomes attractive in these periods and will do everything possible to maintain it and even increase it. As long as they can, they will. We estimate that even in this period of economic uncertainty, they could try to maintain their dividend policies.”
next payments
More than twenty listed companies will distribute dividends in the coming weeks. Very important securities of the Ibex have an appointment with their shareholders. Leaving aside the Telefónica coupon for June, in the coming weeks the largest disbursement will be made by Iberdrola. The electricity company chaired will deliver a coupon of 0.27 euros gross per share, which would mean a disbursement of up to 1,700 million euros in its next scrip dividend, to which those who hold titles as of July 7 will be entitled. This new election dividend will be effective on August 2 for those who request payment in hard cash.
Another electricity company, Endesa, will be the one that makes one of the largest disbursements, which will be close to 1,000 million euros. Those interested in receiving this coupon have until June 28 to buy shares and collect the dividend on July 1, of 0.937 euros gross for each share.
Repsol is also among the companies that make one of the largest global deliveries. The oil company will pay a gross dividend of 0.33 euros per share on July 7, which will mean a total outlay of just over 500 million euros. In order to collect this coupon, you must buy Repsol shares on July 4, the last day.
For their part, two other energy companies, Red Eléctrica and Enagás, will deliver 393 and 267 million euros, respectively, on June 28 and July 4. The first will give 0.7273 euros gross for each share while the amount of the coupon of the second amounts to 1.02 euros.
Acciona will carry out the payment of a record dividend for the company. It is a coupon of 4.1 euros gross for each share that will be paid on July 7 and in order to collect it, the shareholder will have to own shares of the company on July 5.
This dividend, which will entail a disbursement of more than 250 million euros, improves on the gross 3.9 euros per share distributed against 2020. The 2019 financial year ended with the delivery of 1.92 euros; 2018 allowed a gross remuneration of 3.5 euros, and the group delivered 3 euros per share charged to 2017.
Other payments
Among the payments to be made in the coming weeks, that of Fluidra also stands out. The manufacturer will pay 0.43 euros per share on July 5. This will be the first payment of the dividend approved by the Fluidra meeting on May 5 for a total gross amount of 0.85 euros, which it was decided to pay twice: a first payment of 0.43 euros on July 5, and a second payment, of 0.42 euros, on November 3. Fluidra has doubled the dividend it paid last year at this time, which was 0.2 euros per share.
Patricia García, from MacroYield, explains that “in the June and July dividends, we are observing that companies are generally returning to pre-pandemic levels, or even standing above those levels, although the opposite is the case. companies most affected in the period of the coronavirus and that are also affected by the increase in the price of oil, such as Aena or IAG”.
Banking is getting closer to previous levels, although in some cases it has not yet achieved it. “In the medium and long term, however, both companies and banks could have more problems maintaining their dividend levels if, as we estimate, earnings per share estimates are cut,” adds Patricia García.
Below pre-pandemic levels
Nicolás Lopez, director of analysis at Singular Bank, explains that according to his forecasts, the dividends paid by Ibex 35 companies in 2022 could grow by 20% compared to 2021, standing at around 24,000 million euros compared to 20,000 million. That figure would still be 20% lower than the 30,000 million that were paid in 2019.
“The difference with respect to the levels prior to the pandemic is explained by the lower dividends paid by banks, as well as the limitations that still persist in some sectors.” The expert adds that to the extent that the profits of these companies return to normal in 2023 or 2024, they could return to the maximum levels prior to the pandemic. However, the threat of recession can put a damper on any estimate.
Boom in share buybacks
In recent years, share buybacks have proliferated as a form of shareholder remuneration, to the point of reaching all-time highs. In 2021, the S&P 500 companies allocated more than 850,000 million dollars to this operation. During these last months, the Spanish listed companies have jumped on the bandwagon of share buybacks as another method to pamper the shareholder.
In 2021, Telefónica allocated 500 million euros to share repurchases, bringing its treasury stock to 2.41%. The banking sector has also witnessed some of these operations. BBVA has one of the largest share buyback programs in Europe, of up to 3,500 million euros, which is carried out in several tranches through an external agent, Goldman Sachs International. The first tranche of 1,500 million euros was completed in early March, while a second tranche of 2,000 million began on March 16, which is carried out in two segments of a maximum amount of 1,000 million each.
For its part, Santander has already completed the execution of its repurchase program after having reached the maximum approved amount of 865 million euros. The repurchase of securities seems to have come to stay in Spanish banks after years of scrip dividends that increased the number of shares.
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