Companies listed in PSI 20 will give shareholders two thirds of their profits

  • ECO News
  • 5 March 2017

Profit increased, but dividends will increase even further. Companies listed in the PSI 20 will be more generous towards shareholders: out of three euros of profit, investors will pocket two euros.

Portuguese companies listed in the PSI 20 will be more giving this year. In spite of the slight growth in results companies should present, the majority of them is preparing to increase dividends. All in all, for each three euros of profit made last year, two euros should be pocketed by shareholders. In some cases, they will end up paying more than what they have profited in 2016.

Dividends surpass two billion euros

Source: Bloomberg

Since dividend season is coming, many investors are already starting to focus on the listed companies whose remuneration policies are most attractive. And in 2017, dividends should increase over than 25% to a total of 2.15 billion euros, comparing to the previous year — in spite of the profit made by those companies having grown only 4% to 3.07 billion euros. This means that, according to analysts’ estimates, 70% of the profit will end up in the hands of shareholders, in comparison with the the 57% payout from last year.

“In spite of the high level of payout ratio (dividends/profit) being maintained, there was an effort concerning the success of deleveraging most companies listed in the Portuguese index, which can be perceived (for example) in the decrease of the net debt ration on EBITDA from 3.23 times in 2010 to 2.57 times by the end of 2015″, is stated by BiG‘s research team.

Dividends from EDP and Galp

Source: Bloomberg

The math was made considering 14 listed companies from PSI 20, but BPI, BCP, Caixa Económica Montepio and Pharol were excluded from the analysis. From the eight companies analysed, six exceeded market’s forecast, with special emphasis to EDP and Galp: the oil company earned less than last year, yet that didn’t stop it from maintaining a dividends’ remuneration in line with their commitment to shareholders. Together, both companies represent half of the dividends — more than one billion euros.

As for EDP, it announced this Thursday a profit of over 960 million euros — which surpassed analysts’ forecasts. With that result, the electricity company will suggest an increase in dividends of 19 cents per share, meaning they predict a distribution of 700 million euros.

On the other hand, NOS had a profit of 90.4 million euros, and they have increased dividends to 20 cents. This means the communications company headed by Miguel Almeida will have to make an additional effort to pay its shareholders: it will need more than 100 million euros to pay dividends to investors, a payout which surpasses 100%.