Results of the week on the Moscow Exchange

Last week, the Moscow Exchange index fixed above the level of 2450 points. It grew by more than 8% in a month. The “bullish” game is facilitated by the already announced decisions of the boards of directors of large issuers on the payment of dividends, in some cases record-breaking ones. Decisions on payments are expected from oil and gas companies, which should show high profits over the past year. As a result, the market’s dividend yield may reach 11%, which is noticeably higher than the rates on bank deposits.

Dividend Indexing

Following the results of March, the Moscow Exchange index returned to the values ​​of six months ago. Recall that at the end of September 2022, the indicator collapsed amid partial mobilization. At the end of last week, the index consolidated above 2450 points. It has gained more than 8% since the beginning of the month, and almost 14% since mid-February.

The main reason for the positive mood of investors in the Russian market was the decisions of the boards of directors (Boards) of a number of issuers on dividends.

In particular, recommendations were announced on the quarterly dividends of PhosAgro, semi-annual dividends of NOVATEK and Bank Primorye, annual dividends of Sberbank, Moscow Exchange, Inter RAO, Bank St. Petersburg, Group Pozitiv, Beluga and etc. The total amount of payments made by companies that have announced decisions on dividends is estimated by Dmitry Puchkarev, an expert on the stock market at BCS World of Investments, to be slightly more than 875 billion rubles. Dividend yield of the Moscow Exchange index for this year is estimated by experts at 10-11%, which is higher than deposit rates.

The decisions of the Board of Directors of Sberbank and PhosAgro, which recommended record payments in the history of the companies, had the strongest impact on the market.

Sberbank shareholders planned to send RUB 565 billion at the rate of 25 rubles. per ordinary and preferred share, which, according to BCS Mir Investments, provided more than 11% dividend yield. After such news, the bank’s shares confidently went up and added 22% in price in two weeks. Phosagro BoD recommended paying dividends for the fourth quarter of 2022 in the amount of 60.2 billion rubles, or 465 rubles. per share (dividend yield, according to BCS Mir Investments, 6.3%).

However, the decisions of a number of Board of Directors disappointed investors. First of all, this concerns the Moscow Exchange, where, despite the record profit, it was proposed pay less than analysts’ forecasts. The supervisory board of the exchange recommended dividends in the amount of 4.84 rubles. per share (dividend yield, according to BCS Mir Investments, 4.31%). Analysts FG “Finam” counted on payments in the amount of 8.2 rubles. In the week following the announcement, the marketplace’s shares were down more than 11%.

Positive ratings

In the near future, analysts expect the announcement of high dividends from oil and gas companies. According to Sofia Kirsanova, portfolio manager at Pervaya Management Company, it is difficult to predict the exact volumes due to the lack of reports, however, LUKOIL and Gazprom Neft may “surprise with the amounts” of payments.

Oil industry companies will pay strictly according to the dividend policy, says the head of the investment consulting department of Veles Capital Viktor Shastin. “For Rosneft, Tatneft and Gazprom Neft, this is 50% of net profit. For LUKOIL, this is 100% of the adjusted net cash flow,” he notes.

According to Mr. Shastin, Gazprom can allocate 50% of its net profit for the second half of 2022 to dividends.

However, taking into account the decrease in gas prices and the drop in pumping volumes during this period, payments will amount to no more than 10-15 rubles. per share (against 51.03 rubles paid in the first half of the year), the expert expects.

Analysts expect high dividends from state-owned energy companies such as RusHydro, OGK-2, and others. “These companies can send more than 50% of net profit to shareholders against the background of the need to replenish the budget and expectations of strong results for the past year,” says Maria Trofimova .

Capital restrictions

At the same time, this year, as in 2022, most of the metallurgical companies will refrain from paying dividends. According to Sofia Kirsanova, companies in the sector will not resume dividend payments until the announcement and possible payment of windfall tax (a one-time tax payment from additional profit for 2021-2022), announced at the beginning of the year.

“As soon as metallurgists fulfill their obligation to the state, they will be able to share their income with shareholders. Among them are Norilsk Nickel, Rusal, NLMK, MMK and Severstal,” said Ms. Kirsanova.

For technical infrastructural reasons, foreign issuers with Russian assets will not pay dividends – X5 Retail, Headhunter, TCS Group. Companies are unable to pay dividends due to ongoing capital restrictions. For the same reasons, there will be no payments from companies with large stakes from foreign shareholders (Unipro, Raspadskaya), Dmitry Puchkarev, an expert on the stock market at BCS Mir Investments, notes.

Vitaly Gaidaev