The dividend resists at the moment. Far from quarantining or modifying their shareholder remuneration policies almost immediately, as happened two years ago in the midst of the explosion of the pandemic, for the moment the listed companies maintain their remuneration policies, as well as the market consensus.
For now, analysts have not dared to lower their dividend expectations due to the impact of the war in Ukraine, given the lack of visibility on the end of the conflict. “Obviously, the change in the macroeconomic scenario is going to have an impact on the results of many companies and, therefore, on their shareholder remuneration policies, including dividends. What is happening is that at the moment analysts are not wanting to rush and are slow to start seriously revising their earnings estimates downwards, mainly because uncertainty is high and if the conflict ends, the potential scenario will change again. Therefore, it is early for all this to be reflected in company dividends“, explains Juan José Fernández Figares, director of analysis at Link Securities.
In fact, since last February 24, the day Russia invaded Ukraine, many listed companies have reiterated their shareholder payment plans, taking advantage of either the results presentations or the shareholders’ meetings that have begun to be held in recent weeks.
One of the last to maintain its plans has been Inditex, which this Wednesday announced a dividend charged to 2021 of 0.93 euros per share (0.63 euros of ordinary dividend and 0.33 euros of extraordinary) that it will pay with the same amount (0.465 euros) in May and November. By 2022 the extraordinary dividend will increase to 0.40 euros per share.
Patricia García, from MacroYield, believes that companies will try to maintain their dividends, after having reported very good results in 2021, and being aware that investors keep remuneration policies on the investment radar due to their attractiveness in a context high inflation. But she also warns that “some European banks, or other companies with greater exposure to the Russian economy, could be the first to show the leg of the dividend cut.” And she adds that they may not be the only ones, because “the scenario of uncertainty and high commodity prices could remain high enough to significantly damage the economy.”
For her part, Victoria Torre, director of digital offerings at Singular Bank, recalls that “during the pandemic, many companies suspended payment of dividends, and when they have been restored, some of these companies have done so with payment ratios somewhat lower; this gives rise to dividends, although lower, they can be more stable and predictable, even in a context of lower economic growth.”
In any case, some sectors can benefit from the current geopolitical uncertainty, such as energy and oil, which will favor maintaining the dividend, adds the Singular Bank expert.
Jane Shoemake, client portfolio manager in Janus Henderson’s Global Equity Income team, points out that Russia isn’t exactly a significant contributor to global dividends. The expert believes that the greatest impact of the Russian invasion of Ukraine will occur in emerging markets, which accounted for 13% of global dividends in 2021. She does consider it very likely that the contribution of Russian banks and oil companies be severely affected.
Janus Henderson recently presented its 2021 dividend report, a period in which listed companies recovered to pre-pandemic levels worldwide.