Small and medium-sized investors who shift their equity operations toward securities that pay their shareholders with a dividend payment every year are not going through a good time. With a performance that in its best moments has reached approaching 10% levels. But it seems that this trend in this pay has reached its highest point. As you can see through this article.
Dividends are part of a investment strategy very special whose main objective, in addition to providing liquidity, have a fixed income inside the variable. Regardless of the evolution of the share price in the different financial markets. Because in effect, this operation can be carried out both in the Spanish stock market and outside our borders. Although with tax effects that will show some other variation in your personal accounts.
When it comes to the national equity benchmark, there is a good bunch of listed companies that apply this business strategy. To give out the benefits they obtain through their respective business lines. With a very generous cast in some cases. While in all outperform major banking products destined for savings (term deposits, bank promissory notes, public debt, etc.).
Dividends: interest reduction
In any case, these are not good times for investors who choose this strategy to invest their savings. It is true that they have many proposals to make their assets profitable. Of all kinds and nature. In a large part of the securities listed on the Spanish stock market, regardless of their sectors and their degree of capitalization. But no longer with the returns of yesteryear. The main reason is because the payment of dividends has been reduced in the third quarter of the year by 4% compared to the same period last year, based on data provided by the Henderson Global Dividend Index.
To the point that the number of companies that were in charge of distributing their dividends among shareholders lowered their monetary volume up to the figure of 281.700 billion dollars in the last months of this year. As you can see, this is the lowest figure since the second quarter of 2015. This in practice means that you will have less liquidity in your checking account from now on for this concept.
One of the reasons for this new scenario that appears from now on in equities is a drop in extraordinary dividends. Something that should be indifferent to you to show your interest in the securities of the stock market that distribute this remuneration. But instead the fact that it is causing a slowdown in these payments on account. Not surprisingly, you will have already had the opportunity to confirm this trend through some stocks in which you have taken positions during this complicated trading exercise.
And in other international markets?
All these data correspond to the equities of the United States. But it also has an extrapolation to European markets, and of course to Spanish, which is the one that interests you the most at the moment. Reaching its incidence even to emerging markets which has seen how in recent years they have seen a more than appreciable decrease in the average yield of their dividends. Specifically, with a decrease of around seven percentage points. Because in effect, Chinese companies are cutting their shareholder compensation. But especially, it stands out in the banking sector, due to a decrease in the profits of Asian financial institutions.
From this totally objective perspective, it can be said that from now on it will not be so profitable to opt for dividends in international equity markets. Or at least not with the ease of previous exercises. It will be a more or less reliable track so that you can focus your investment strategy from now on. Not surprisingly, the return on your savings will be less from now on in these financial markets. Without knowing when they can rise again and you can open positions in some of their values.
Dividends in Spain
But surely what worries you the most is what happens here, in the national markets, which is where you usually carry out your operations on the stock market. Well, the trend is not the same as in the previous cases, much less has it yet reached those levels of falls in its profits. Quite the contrary, since Henderson's study shows that dividends in Europe at this time amounted to 19.000 million dollars, which represents a 15,9% increase year-on-year due to changes in the index and temporary variations in Spain.
But this is not always the case in all cases, as some small and medium investors can see from their own experience in financial markets. In many cases, it will depend on the company chosen to opt for this shareholder remuneration so popular with the most conservative or clearly defensive savers.
From this perspective presented by this modality of national equities, some very important market analysts allude to the fact that Spanish companies listed on the stock exchange they tend to distribute more evenly throughout the year, unlike the rest of Europe. This is evident, after the results presented indicate that the remuneration in Spain amounted to 6.200 million dollars. Which means almost a third more than those paid on the European continent.
Better dividend yields
With regard to domestic equities, it should be noted that it has a significant value that generates one of the highest returns in the financial market. In contrast to this good data, it is necessary to highlight the fall in the profitability of the dividends of the oil company Repsol, with a percentage of 4,7%. The excellent performance of all electricity companies also stands out, ranging in margins from 3,50% to 7,50%. Leading the classification for this remuneration that shareholders receive every year.
Another piece of information that makes this payment higher than in other geographical areas is mainly due to the remarkable results obtained in Europe and which make the underlying growth of dividends outperform other financial markets this year. In addition, with a wide and extensive offer which allows you to choose between the many proposals offered by Spanish equities.
For you to verify this trend that the dividend payment is leading in our country, it is enough that you check what its incidence is with respect to other countries in its closest environment. Thus, within the euro zone, it is the Czech Republic that shows the highest returns for this concept. With a payment that generates an interest rate slightly higher than 5%, while Spain is in the group of the main remunerated from this payment to shareholders, with a yield of 4,10%. In line with those offered by the continent's benchmark index, the Eurostoxx, and above countries with a specific weight in equity markets, as in the specific case of France, Italy or Germany.
When are they charged?
One of the characteristics of dividends on the stock market is that they can be collected in different periods, depending on the remuneration policy of each listed company. Normally the period chosen by companies is semi-annually or annually. In any case, there is no shortage of sectors - such as banking - that opt for a quarterly payment. That is, four times during each exercise. So that you can have greater liquidity in your checking account to face certain payments that you must assume in these periods.
Are charged under greater flexibility in your fertilizers. You can receive them directly in the deadlines approved by the companies. Or, on the contrary, reinvest them in the purchase of new shares to give more power to your investment. As a consequence of this special investment strategy, you will be fully prepared to increase the return on your savings. It is a technique that you can develop especially if you go to the medium or long term.
You should also bear in mind that some companies on the Spanish stock market have withdrawn dividends within their remuneration policy. As a consequence of the drop in profits derived from the economic crisis as of 2007. Causing, on the other hand, the departure of many small and medium investors from the positions of these securities. Also affected to the quotation of their prices in the financial markets. Up to the lowest levels in recent years.
From this perspective, dividends can continue to be one of the incentives for you to continue from now on in equities. Not surprisingly, it offers a return on savings that is superior to those of banking products based on fixed income (term deposits, corporate notes, bonds, bonds and government bills, among the most important. 0,50% level. As a consequence of the lowering the price of money by the policy promoted by the European Central Bank (ECB). Causing that many savers have diverted their economic contributions, from fixed income to variable. Massively in some cases.