Most shares on the stock market dropped from August 27, 2008 through August 2012, because Lehman Brothers bank filed for bankruptcy in September 2008, causing stock markets to plummet. The Bucharest Stock Exchange was among the heaviest hit by this blow.
Under the circumstances, investors were more cautious and sought shelter in shares with a high dividend payment rate, which are a safe source of cash.
Out of the eight shares that posted the highest increases on the stock market in the last four years, six are known for the high dividend payment rates.
This category includes Zentiva Bucuresti (SCD.RO), which posted one of the biggest increases of this period, 49.1%, and rewarded its shareholders with really hefty dividends.
Zentiva paid gross dividends of 0.318 lei (EUR0.07) per share in 2010 and 2011 together, which is almost half of its share price on Monday, RON0.78.
Whoever would have owned Zentiva stock during this period would have got a 120% gross yield adding the dividends, that is RON1,171 at an initial investment of RON0.53 per share.
“Investors no longer have the patience to believe in fairy tales about a company generating cash after a number of years, they are looking for certainty and dividends are a certainty. The cash from dividends is proof that the company in question can afford to part with some of its cash to give it to shareholders and they can use it for other investments,” says Mihai Caruntu, head of the capital market research department of BCR, Romania’s largest bank.
“It became very important, especially after the bankruptcy of Lehman Brothers, for the investment in an asset to generate annuity, be it dividends from stocks or rent from an apartment or income for farming land. Long-term sustainability of stocks comes from the company’s capability to generate cash flow. Cash income paid as dividends is concrete way of getting one’s investment back.”
The shares of rolling stock manufacturer Voestalpine Vae Apcarom Buzau (APC.RO) gained 20.7% on the stock market in the last four years, and were among the few that increased during this time.
The company took investors by surprise when it paid RON0.31 in cumulated dividends in 2010 and 2011, which, compared with the price on the stock market, translated into an about 55% yield. The total yield Voestapline Vae Apcarom shares generated was 76.5%, dividends included, much higher than other shares.
Brewer Bermas Suceava (BRM.RO) has been a constant payer of dividends over the last few years, and its shares have increased by 18.8% since August 2008. The gross profit of investors of the last three years, dividends included, stood at 41%. The company’s results have been relatively stable and have improved in the last few years.
Aircraft manufacturer Aerostar Bacau (ARS.RO) has gone up 9.4% since August 2008, before the onset of the crisis, and is one of the few companies on the stock market that has managed to significantly boost its revenue and profit and give almost its entire profit to shareholders.
Aerostar paid RON0.21 in dividends in the last three years together, therefore the gross dividend yield stood at 20% and the total yield of the stock reached 29.4% in the last four years. The aircraft maker’s revenue went up by 34.8% in the first half this year, compared with the first half of 2008, while the profit was seven times higher, RON6.2 million.
“A survey of the US market of the last eight years showed that 65% of the investors’ profits from US stocks came from dividends. Dividends are all the more important after the crisis. Petrom indicated that it would pay about 40% of its profit as dividends over the coming years. Transgaz cannot sustain a long-term 90% dividend rate, but can manage a 50%. Stocks like Zentiva, Apcarom and Bermas can be an investment option for more sophisticated retail investors,” Mihai Caruntu says.
National gas transmission company Transgaz Medias (TGN.RO) shares are among the few liquid shares that gained ground on the market after the start of the crisis, well known among investors for its dividends.
Although the yield of Transgaz has been quite low in the last four years, 4.4%, investors collected RON71.55/share in dividends for the entire period, which takes the total yield to 41.7%.
OMV Petrom (SNP.RO) has lost 7.8% on the stock market in the last four years, but considering the dividends the company disbursed, an investors would have seen a 3.7% yield overall.
(English version by Loredana Fratila-Cristescu)
| Stock trend | H1 2012 revenue | H1 2008 revenue | Trend | H1 2012 profit | H1 2008 profit | Trend | |
| Azomures Tg. Mures (AZO.RO) | 202.1% | 995.1 | 592.0 | 68.1% | 165.6 | 132.2 | 25.2% |
| Zentiva Bucuresti (SCD.RO) | 49.1% | 139.4 | 106.7 | 30.6% | 21.2 | 22.0 | -3.6% |
| Oltchim Rm. Valcea (OLT.RO) | 34.2% | 540.6 | 1,053.7 | – 48.7% | -188.2 | -37.2 | 405.4% |
| Vae Apcarom (APC.RO) | 20.7% | 33.4 | 42.8 | -21.9% | 1.4 | 1.7 | -19.0% |
| Bermas Suceava (BRM.RO) | 18.8% | 11.5 | 9.8 | 16.5% | 0.6 | 0.0 | 3,826.6% |
| Carbochim Cluj (CBC.RO) | 16.7% | 14.8 | 17.1 | -13.4% | 1.4 | 0.6 | 138.6% |
| Aerostar Bacau (ARS.RO) | 9.4% | 88.1 | 65.4 | 34.8% | 6.2 | 0.9 | 575.5% |
| Transgaz Medias (TGN.RO) | 4.4% | 718.3 | 543.1 | 32.3% | 210.4 | 143.6 | 46.5% |