What year will 2021 be for dividends? To the delight of investors, after the reductions and suspensions seen in 2020 due to the pandemic, the coupons will finally increase again, even if the glories of the pre-Covid era - at least for this year - will remain a mirage. Above all, the new limits imposed by the ECB on banks (with some openings) and the repercussions that the emergency has had on the accounts of listed companies will weigh heavily. In short, those looking for high returns will be forced to wait for next year, but it will be possible to do some good business anyway.
Speaking in figures, in 2020 the various European companies included in the MSCI Europe they distributed 290 billion coupons against the 360 billion disbursed the previous year. “Overall, less than three out of four European companies paid dividends last year, compared to more than 90% in previous years,” reads the Allianz Global Investors Study 2021. In 2021, according to Allianz estimates, the dividend amount will start to rise again, touching quota 330 billion euros (+ 15%).
“As with the economy, we do not expect a V-shaped recovery in dividend payouts in 2021, only a partial recovery from the previous downturn. According to our expectations, to return to pre-crisis levels we will have to wait at least until 2022.”, explains Jörg de Vries-Hippen, Cio Equity Europe of Allianz Global Investors.
“Let's not forget the differences between one sector and another. Healthcare and utilities, for example, have managed to increase distributions during the crisis and will likely continue to do so in the future. Other sectors, however, faced more difficulties in 2020. Companies active in cyclical consumer goods and industrial goods are likely to be able to increase dividends only in the face of a general economic recovery, and distributions in sectors such as energy and financial services are likely they will remain below their previous highs,” adds de Vries-Hippen.
The coupons will also rise again in Italy. In 2020, the value of dividends distributed by companies listed on Piazza Affari collapsed to 13,8 billion euros, compared to 20,5 billion paid in 2019. What will happen in 2021? Based on the calculations provided by Intermonte to the Affari & Finanza section of La Repubblica, the total amount of coupons to be distributed to shareholders will be close to 15,9 billion euros.
The focus is once again on the banks. In 2020 lenders suspended dividends at the request of the European Central Bank. This year the strongest banks and with a better quality of the assets they will be able to return to disburse part of the profits, but following precise rules. In fact, the Eurotower advised "extreme caution" on the issue of distribution, suggesting limiting the coupon to 15% of cumulative 2019-2020 earnings and not exceeding 20 basis points of Cet1 capital. Taking a practical example, a few days ago Intesa Sanpaolo announced that the 2020 financial year closed with a net profit of 3,277 billion euros. The BoD will propose to the shareholders' meeting the distribution of a cash dividend of 694 million, ie 3,57 eurocents per share, the maximum permitted in compliance with the indications of the ECB. In September 2021, once the limits imposed by European supervision have fallen, the rest could arrive.
Eyes also on insurancei after the limitations imposed by IVASS in Italy and by EIOPA in Europe. The European Authority also asked for caution and prudence, but did not prohibit the various companies from disbursing coupons on the 2020 financial year nor from distributing the dividends relating to 2019 which had been frozen due to Covid. Not surprisingly, according to Mediobanca Securities, Generali should close 2020 with a profit of 1,97 billion euros, a figure that would allow the Lion company to pay a coupon of 1 euro per share.
Also keep an eye on the choices of the companies managed savings, even if the most attractive dividends should come from utilities. Intermonte in fact, it provides very attractive returns from A2A, Acea and Snam.
(Last update: 16.46 pm on 8 February).
