Historic spring of dividends in Europe with returns of 7%

Automobile companies, banks and insurers will pay their highest payments after overcoming the restrictions due to the pandemic, and armed with share buyback programs. BNP paribas is the most profitable bank payment, with 7%, and Axa with 6% among insurers. On the whole, 37 companies will pay their shareholders from April to June, with an average return of 3%. The payments of Mercedes and BMW are the most profitable on the continent, reaching close to 8%.

Three out of four companies that make up the EuroStoxx 50 will reward their shareholders this spring with their dividends. is the European stock market high season in which up to 37 payments of the giants of the continent will flourish. The average profitability of these payments reaches 3%, although there are six companies with remuneration that beat a return of 6%.

Who are they? Mainly automobiles and some finance. That, everything is said, are the two more penalized sectors for almost five years in the Old Continent, long before Covid became a term coined worldwide. Mercedes-Benz and BMW are close to 8% with their announced dividends; Stellantis reaches 7% and Volkswagen 5%.

In the case of financial securities, the payment of BNP Paribas that, without counting his repurchase of shares, he rents 7%; followed by his compatriot AXAwith 6.1%, the also insurer Allianz, Munich Re and closes the table the only Spanish that sneaks into the ten most attractive remuneration: BBVA.

In total, the companies will distribute about 66,000 million euros in dividends over the next three months, until on June 21 the spring that has just begun gives way to summer, which is, by the way, the high season on the Spanish stock market in terms of shareholder remuneration.

automobiles

The dividend yield of the Automotive Stoxx 600 is 5.3% -driven, partially, by the fall in the stock market since the war in Ukraine began-, although it has been trending upwards for months, after the payment cancellations or reductions of recent years (as is the case of Stellantis or BMW). On average, in the five-year period its profitability has stood at 3.6%, which is now 170 basis points higher.

In addition, a peculiarity of automobile companies is that pay dividend only once a yearwith which the 6%-7% that they are offering is complete for this spring. Mercedes-Benz (former Daimler) is the brand with the most attractive dividend, at 7.9% at current prices. Your payment will arrive on May 4 for an amount of 5 euros per share (on the 2nd the share will already be listed without the right to receive it).

The consensus expects the German firm to have a growing dividend, up to 5.45 euros next year, so buying its shares today with a view to this payment means accessing a dividend of 8.5%. In 2021 the firm obtained a extraordinary profit of 23,000 million eurosthanks to spin off Daimler Trucks (9,216 million); and this will also lead him to give the greatest retribution in his history. In the past two years (charged to 2019 and 2020) his payment was limited to 40% of payoutat 0.9 and 1.35 euros, respectively, and will continue to be so this year as well.

From Deutsche Bank they also maintain that their valuation ratios are even more attractive “than they have been historically”. “Its PER in 2022 is 5.5 times, below the 7 times average of the last ten years, and with a discount against the Dax [índice donde cotiza] 55% compared to 45% of its historical average”, they conclude.

BMW and Stellantis they also place their remuneration above 7%. The first to go through the box will be the conglomerate formed by Fiat Chrysler and PSA. It will do so on April 29, although to access the payment it will be necessary to have shares before the 19th. The company will pay 1.04 euros in its only annual payment charged to 2021 and the first (ordinary) in its history, which supposes some €3.3 billionon a profit of 13,400 million euros (24.6%).

The new holding is aligned with the high remuneration of the sector, after distributing among its shareholders the sale of Faurecia (in shares mode) and the extraordinary of 0.32 euros last year. The projection is that your payment will increase by 6% from 2022, to 1.1 euros.

To collect the BMW dividend, we will have to wait until May 16, when it will distribute 5.8 euros per share, which yields 7.8%, and will become the highest dividend in its history, thanks to extraordinary items that raised their profits to 12,463 million. Payment will be kept below a payout 40%, the maximum set by the company.

In the group of automobile companies listed on the EuroStoxx 50, it is also Volkswagen -eighth most profitable payment of the spring- with 5%. Your dividend will arrive on May 17, for an amount of €7.56 per title. The consensus expects it to increase to 8.1 euros against the current financial year, 7% higher, despite the uncertainties affecting the company -given the multiplicity of brands and their location-.

The firm itself has recognized an impact of the current crisis on margins. From the previous 10.3% in 2021 it will fall to a forecast range of 7-9% on EBIT (only automotive business). In your case, your exposure to Russia is through alliances with local “Which will not require a revision of the valuations,” says JP Morgan, and is still pending the successful completion of the Porsche IPO.

Financial

Given its current undervaluation in the market – the big banks are trading at a 30% discount on their book value – the financial sector’s dividend has returned to regain its pre-pandemic glow, at prices, however, lower. The Stoxx 600 Banks is still trading 5% below February 2020 levels, with names like Unicredit, Société Générale, Santander and Intesa trading 30% to 13% still lower.

Between the entities -where it slips BBVA with its payment on April 8, which gives 4.4% without counting the repurchase- highlights the dividend of BNP Paribas. The French entity will pay its payment on May 25 (with an ex-dividend date on the 23rd). It is the fourth highest remuneration in the EuroStoxx 50, with 7%. In addition, the bank finished in the last quarter of 2021 a buyback of shares valued at 900 million euros, which represented, at the time it was announced, 1.4% of its capital.

Once the limitations announced by the ECB to alleviate the cash outflow of entities in the midst of a pandemic have been lifted, BNP has recovered a payout 60%-50% off cash and another 10% in repurchase of shares (the one already mentioned)-. will pay a total of 3.67 euros gross per share as a single annual payment. Looking ahead to next year, the remuneration is expected to increase to 3.75 euros, 2% more.

Another classic among the most interesting rewards in Europe is that of the French insurer AXA, with a return that exceeds 6%. The payment for this spring is scheduled for May 10, although to access it it is necessary to have shares before the 6th. 1.54 euros gross per share among its shareholders. It is your only payment and it has increased by 7.7% compared to the 2020 payment, which had to be delayed due to the limitations imposed by Eiopa (the European Association of the insurance sector).

And the consensus expects it to continue the trend in the future, since forecasts point to a payment from 2022 of 1.6 euros. Another insurer, in this German case, sneaks into the ranking with a payment of 5.1%. Is Allianz from whom a dividend is expected €10.8 per share, payable on May 9 (to access it it is necessary to have company shares before the 5th of that month). It is also its only annual payment and the highest in its history.

Both insurers have in progress share buyback programs for a maximum joint value of 2,700 million euros. The French firm will acquire up to 1,700 million euros in shares (2.8% of the total) until April; while the German will amortize titles for up to 1,000 million euros that it will buy from March 8 to December. It is equivalent to just over 1% of the total.

For its part, Munich Re will carry out a new repurchase for a maximum of 1,000 million euros, equivalent to 3% of its capitalization. The insurer is the ninth firm of the EuroStoxx with the most attractive payment, since it rents 4.7%, with 11 euros gross per share -It has increased by 1.2 euros compared to 2020-. The date to collect your remuneration in cash is next May 3.

The last financier in the ranking is BBVAwho manages to get hold of the 10th most attractive dividend among the 37 payments that will take place in the spring thanks to the 4.4% that the 0.23 euros that will be distributed on April 8 give. The shareholder who wants to collect it must have shares in the entity before the 6th of next month, which is the date on which he will already be listed without the right to receive it.

In addition, the firm is developing the most ambitious share buyback program in the entire sector in Europe. It’s of greater amount, 3,500 million, in less time, twelve months, until November of this year. It will repurchase 10% of its capital and, right now, it has already started the second tranche of the repurchase. The annual dividend amounts to 0.31 euros.

The other two Spanish

Inditex and Banco Santander coincide on the day chosen to remunerate its shareholders, which will be May 2, with a cut-off date of April 28. The textile firm has already announced its two pending payments for this year, of the same amount: 0.465 euros, which yield 2.2% at current prices. It includes in the second of them -scheduled for November 2nd- an extraordinary amount of 0.3 euros.

In the case of the entity chaired by Ana Botín, it will face the second of its annual installments, for 0.0515 euros per title. To this is added a repurchase of shares of 1,300 million euros, which doubles the amount of his remuneration.