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Although the debate about whether or not to distribute these resources in the midst of the pandemic continues, the figures show that betting on “dividend” titles is a good investment.
Failure to distribute dividends due to Covid-19 by public limited companies generates debate, especially due to the requirement of Law 18,046 to distribute at least 30% of the profits of the previous year.
The truth is that buying shares and receiving dividends can be a good business, especially in those companies called “dividends”, that is, they distribute a higher percentage of profits. Sectors such as banking and healthcare are characterized by distributing more than the minimum legal 30% required.
The sum of the dividends per share of the companies of the stock market benchmark S&P IPSA reached $ 887.83 during 2019. This is 6.53% above the sum of the dividends per share delivered by the same firms in 2018, which It reached $ 833.40, according to data from the Abaqus firm. These figures were given despite a marked drop in the companies in the bottom line. The profits of the 30 companies that make up the selective index of the stock market reached $ 5.70 trillion as of December last year. This showed a year-on-year drop of 20.33%.
Extraordinary dividends
So how did profit-sharing increase if it fell? The answer lies in the delivery of extraordinary dividends, according to Nevasa Asset Management’s investment manager, Jorge García. These actions are generally linked to non-recurring events, such as the sale of assets.
Engie was the case for the dividend that rose the most proportionally last year, which went from distributing $ 16.65 per share in 2018 to $ 73.83 last year. This was driven by the delivery of an additional dividend in late May 2019, coupled with an 8% increase in earnings. “These are specific situations of companies,” says García.
All in all, data from the Financial Market Commission (CMF) show that IPSA companies distributed $ 4.01 billion among their shareholders last year.
For this year, the figure is expected to be much more modest. In an environment where it is anticipated that national companies will see their results impacted by the coronavirus health crisis and that companies try to have more austere profit-sharing policies, 2020 would see less profits (than there are) in the hands of the shareholders.
Deputy Silber asks the CMF to intervene
DC deputy Gabriel Silber demanded that the Financial Market Commission (CMF) intervene in the process of withdrawing profits from the AFPs and report if they incur in a change in the stock markets with this operation.
“We ask that it be reported if the AFPs incur an alteration in the stock markets when proceeding to withdraw funds from profits in times of crisis, since the management of the investment portfolio of their portfolio, which is reflected in the negative balances already the drop in the capitalization accounts of the contributors-savers is disastrous and with millionaire losses for all Chileans, “he argued.
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