2024 will not only be remembered as the year of a still healthy fixed income, after the greater satisfactions of 2023, but also as a year of the rich dividends on the stock exchange in many sectors, with banks and insurance companies in the forefront. Then the rich are added buyback which add resources to shareholders' coffers. In this situation and with the Stocks at highs, we ask ourselves whether we are faced with a bubble or not: analysts are comforted by the positive prospects that have emerged from the industrial plans.
Between May and JuneAccording to Intermonte's estimates, the companies listed on the Ftse Mib will break away dividends for a total amount of 33,4 billion euros with an increase of 26,2% compared to 2023. Last year, as certified by Janus Henderson Investors, the Italian Stock Exchange had issued a total coupon of 18,5 billion.
All things considered, the dividend yield, i.e. the coupon yield at current prices, is on average around to 5% compared to 4,2% a year ago. But, sifting through the dividend proposals indicated in the companies' 2023 financial results, some surprising dividend yields emerge which, perhaps with the help of extraordinary coupons, also go more than 12%. The value of the dividends that will be distributed between next May and June is that expected by the boards based on last year's profits. In some cases a part has already been brought forward between November and January. However, some companies have said that they will most likely advance part of the 2025 coupons on 2024 profits in the autumn.
“The 2023 dividend estimates to be paid in 2024 for the Ftse Mib have been further increased with the publication of the results,” he explains alberto villa, head of equity research at Intermonte. “The most interesting sectors for dividend distribution are those of banks and utility”, with the latter presenting “a more regular growth in remuneration over time. The automotive sector is also doing well, which unlike in the past is now able to pay important dividends thanks to its considerable cash availability". But the visibility over the following years is also good, as many read industrial plans presented in recent days, with further growing dividends, as has been indicated for example by Poste, Terna and Leonardo.
The banking sector: Banca Ifis in the lead with a dividend yield of over 12%
It's big banks the champions of takings and giving back to members, given that they have managed to derive the maximum benefits on revenues from the increase in rates of interest decided by the ECB, thanks to the adjustment of the charges on loans and, on the other hand, to the almost zero remuneration of current accounts. The surge in interest margins was reflected in the to evaluate, which on a cumulative level they have reached share 24 billion based on the results of Intesa Sanpaolo, Unicredit, Banco Bpm, Bper, Mps, Mediobanca, Popolare di Sondrio, Credem and Crédit Agricole Italia. In turn, to a large extent, these huge profits were "passed over" to the shareholders. Taking for example Unicredit, at the end of April its shareholders will find the coupon increased to 1,8 from 0,99 euros per security, for a total of 3 billion. But it is also necessary to mention the novelty of Mount Paschi which, after an absence of 13 troubled years, will return to paying the dividend two years ahead of the plan's objectives: 0,25 euros per share, for a dividend total of 315 million euros.
The first company for performance is Bank Ifis, which at current prices has a dividend yield of over 12%, to follow Bpm bank with approximately 9,4%, Equita in third position with 9,2%. Among bankers, they also have the same yield (9%). Intesa Sanpaolo e B for Bank. Then there they are Banca Popolare di Sondrio 8,2%, Bff Bank by more than 8%,
The Saes case: extraordinary dividend yield of around 36%
Among the major coupon dispensers, comes next Italmobiliare with 9%, the family holding company Heavy this year it will issue a total dividend of 3 euros per share, of which 0,8 euros in the ordinary part and 2,2 euros in the extraordinary part after the sale of two brands in the portfolio, on the one hand Florence (fashion and accessories), on the 'other Autogas (energy sector), the latter announced at the end of February.
Then, there is Saras, a group specialized in oil refining, which has a dividend yield of around 8,5%, Rcs by approximately 7,9%, Piaggio, Enel, Post they travel around 7%. Positive surprises also came from Ferrari (2,44 euros, up 35%, Italgas (0,35 euros, +11%), Leonardo (doubled to 0,28 euros), Terna. They will return to the coupon also Fiera Milano (after four years) e sabaf, while Saipem, which revised its profit in 2023 (179 million euros) has announced that it will return to distributing a coupon starting from 2025. nexi Instead, it continues to leave members high and dry.
But the case that causes the most sensation is that of Saes. The industrial components group listed on the Star segment of the Milan stock exchange sold part of its activities to the American Resonetics for 900 million dollars in the autumn of last year, resulting in a capital gain of approximately 698 million. The board has decided to pay a particularly high dividend, which will be paid in May, of 12,51 euros which, at the share price of 34,8 euros, is equivalent to an extraordinary dividend yield of approximately 36%. Having removed the maxi dividend, carried out the buyback and financed the early retirement plan, president Della Porta said Saes should find himself with around 350 million available. Since the beginning of the year, Saes has risen by 8,1% while in twelve months the performance is positive by 15,7% with a capitalization of 616 million.
The case of Azimuth which offers a mixed dividend, 1,4 euros divided between 1 euro in cash and 0,4 euros in shares. The latter are securities subject to buyback and therefore the company distributes not operating profits but assets, with the consequence that the scrip dividend is not subject to taxes. This form of dividend is interesting if the shareholder believes that the stock has the potential to appreciate in the future.
Not just dividends: the remuneration of buybacks
But shareholders' coffers will be filled not only by dividends, but also by large share buybacks, operations which among other things allow the prices of securities on the stock exchange to be kept high. Among the major buybacks announced in Italy, those of Unicredit, Intesa Sanpaolo and Stellantis should be noted
“Unlike the United States” Villa underlines, “in Italy the buyback dividend to remunerate shareholders has always been more widespread. Today, stock buybacks have become widespread in our country, especially in the banking sector, where they tend to create value because in many cases shares trade below tangible net worth." More generally, according to the Intermonte expert, “the choice between buyback and dividend also depends on the shareholder structure. In public companies with widespread ownership, the buyback is appreciated, while if there is a strong nucleus of member foundations, which use the dividend for disbursements to the territory, the coupon logic may prevail".
Bubble or no bubble?
Between dividends and share buybacks, the rise of global stock markets is increasing and they are at their highest levels. To the point that there are those who fear a bubble. Villa discards the pessimistic scenario: “In a “normal” situation we do not foresee strong reductions in dividend policies, also because all the companies have given positive reassurances. Including banks, which should not be affected by either a cut in interest rates or, at least in significant terms, a possible request for greater provisions from the supervisory authorities". In this framework, “the main risk remains a geopolitical event or a “black swan” that affects corporate profits”. Excluding this eventuality, for Villa, "the Ftse Mib, with its massive presence of banks and utilities, could benefit from the return of the search for dividends, which in the last year and a half was partially slowed down by the rush for government bonds. A scenario that could change with the reduction in rates in sight."
