What are the best PSI-20 bets for generous dividends?

  • ECO News
  • 5 March 2018

The dividend hunt season is about to open in the Portuguese stock market, and Portugal is Europe's champion in this league. But do you know which are the best bets?

There is no turning back: dividend season is coming to the Portuguese stock market, one of the highlights of the year for investors. In this league, Portugal deserves the honor of European champion. Which are the best dividends?

There is a handful of opportunities in PSI-20, according to analysts contacted by ECO: REN, Navigator, Galp, EDP Renováveis and Corticeira Amorim. But every case is different, and it is worth recalling that the dividend yield, the tool used to assess the attractiveness of a dividend, is quite far from being the main reference indicator experts look into.

The dividend yield compares the dividend price with the price per share: the bigger the ratio, the more attractive the dividend, according to the price of the share. In theory… because there are other factors worth considering when looking for a good dividend.

Five shares with the largest dividend yield in Lisbon


Sources: Reuters and CMVM

Sonae Capital, which comes up as the fifth largest dividend yield in Lisbon, but it does not draw analysts’ attention: the company registered losses in 2017, but it will give a six cents dividend, in a total of 15 million euros.

BiG’s research team explains: “If a company consistently pays (for several years) more in dividends than what it generates in profits, the sustainability of dividends might be something to be concerned about, given the fact that the company might need to access its own equity, or the debt market, to get the difference between distributed dividends and the profit they generate”.

The opportunities

What companies stand out? “Maybe we should mention two companies: REN and Navigator“, stated the manager of Patris, Albino Oliveira, adding: “Both companies present a dividend yield way above 6% of its current value”.

As for BiG, it highlights that Galp, EDP Renováveis and Corticeira Amorim will distribute their dividends by its shareholders. A small detail: none of the listed companies has a dividend yield over 4%, well under the average ratio that puts Lisbon on the European throne.

Portugal is the European dividend champion

Source: Allianz Global Investors

On average, it is expected that Portuguese dividend yields reach 4.47% in comparison to the prices of shares, according to an analysis by Allianz. It is the largest dividend yield in all Europe, immediately in front of Spain (4.47%) and Finland (4.02%).