JULY 6, 2016
EQUITY STRATEGY
JULY DIVIDEND SEASON: TAKE DIVIDENDS,
MAXIMIZE TOTAL RETURN
Andrey Klapko
+7 (495) 983 18 00 (ext. 2 14 01)
[email protected]
We recommend to stay in liquid names with upcoming dividend cut-off
dates and take dividends, as our historical analysis of post-dividend stock
performance and investor behavior suggests the high probability of a
positive total return already five days after the record date. We highlight
Lukoil, which has shown particularly strong historical performance
following dividend cut-off dates. This Friday, July 8, is the last day on
which the stock trades with dividends.
Given the approaching record dates for dividend payments over the next few
weeks, investors are focusing more closely on dividend-paying stocks and
contemplating whether to pass through these dates and take dividends, or to
exit the stories before the cut-off dates and avoid inevitable share price
corrections afterwards.
While we acknowledge that the share price performance of dividend-stripped
stories depends on numerous external factors and is case-specific, our
historical analysis suggests that passing through the dividend cut-off dates is
generally favorable for investors with regard to companies with consistent
dividend policies and adequate liquidity.
Historical analysis suggests a good success ratio for dividend
takers
According to our 10Y historical analysis of key liquid names with long and
consistent dividend histories, investors have managed to earn a positive total
return (dividend yield + share price performance) already on a 5-day horizon
after the cut-off date in 50-80% of the cases (“success ratio”). This success ratio
is also sector-dependent, as the more volatile high-beta metals and mining
sector tends to show less predictable results (Norilsk Nickel) compared with the
more stable telecoms sector (MTS).
We highlight Lukoil for its impressive post-dividend
performance
Alexander Nazarov
+7 (495) 980 43 81 (ext. 5 43 81)
[email protected]
Erik DePoy
+7 (495) 983 18 00 (ext. 5 44 40)
[email protected]
Nearest record dates
COMPANY
SECTOR
EX-DIV DATE
Rostelecom
Telcos
MegaFon
Telcos
Lukoil
Alrosa
Gazprom
O&G
YIELD
July 7
5.92
6.4%
July 8
56.45
8.0%
O&G
July 11
112.0
4.0%
M&M
July 18
2.09
3.0%
July 19
7.89
5.6%
Source: Bloomberg, Gazprombank estimates
Examples of stock post-dividend
performance in 2016
5 DAYS
AFTER
CUT-OFF
TOTAL
RETURN
1.1%
-2.2%
-1.1%
COMPANY
SECTOR
DIV YIELD
NOVATEK
O&G
Rosneft
O&G
2.4%
-5.5%
-3.1%
Sberbank
Fin
1.2%
-1.0%
0.2%
MOEX
Fin
6.3%
-1.7%
4.6%
Source: Bloomberg, Gazprombank estimates
Average total return and success ratio
4.5%
In our focus group of liquid names with the nearest cut-off dates (Rostelecom,
MegaFon, Lukoil, Alrosa, Gazprom) we highlight Lukoil, as it has a particularly
strong history of share price performance after the dividend cut-off date
(average 5D total return of 2.9%, implying a 71% success ratio).
3.5%
Examples of post-dividend performance in 2016: uneven but
generally encouraging
0.5%
We note that there are already some examples of post-dividend performance
this year (Moscow Exchange, Sberbank, NOVATEK, Rosneft) and we find
them generally supportive for our stance. We highlight that Rosneft shares
declined after the record date and have failed to recover so far; the stock was
one of the growth leaders YTD (+26%) and was close to YTD highs right
before the cut-off date.
DPS, RUB
71%
79%
2.9%
2.8%
50%
60%
2.5%
1.5%
0.0%
-0.5%
-0.5%
-1.5%
LUKOIL
MTS
AVERAGE TOTAL RETURN, %*
NORNICKEL
GAZPROM
SUCCESS RATIO**
* 10Y average total return (div yield + stock performance) for
five days after divided cut-off date
** ratio of cases in which total return was positive
Source: Bloomberg, Gazprombank estimates
Research Department
1
Copyright © 2003-2016.
Gazprombank (Joint Stock Company)
EQUITY STRATEGY
JULY 6, 2016
APPENDIX
Lukoil historical post –dividend performance
EX-DATE
DIV, RUB
DIV YIELD
5D
PERFORMANCE
20D
PERFORMANCE
TOTAL RETURN
5D
TOTAL RETURN
20D
21/5/2006
33
1.6%
9.6%
-8.8%
11.2%
-7.2%
14/5/2007
38
2.0%
2.9%
2.6%
4.9%
4.6%
05/12/2008
42
1.8%
12.6%
4.3%
14.4%
6.1%
05/12/2009
50
3.1%
-6.4%
3.2%
-3.3%
6.3%
05/11/2010
52
3.2%
-1.9%
1.2%
1.4%
4.4%
05/10/2011
59
3.2%
-6.6%
-5.5%
-3.5%
-2.4%
14/5/2012
75
4.4%
-5.0%
1.5%
-0.6%
5.9%
13/11/2012
40
2.1%
-1.0%
3.4%
1.1%
5.5%
14/5/2013
50
2.4%
-1.3%
-7.6%
1.1%
-5.2%
16/8/2013
50
2.6%
0.5%
3.8%
3.1%
6.4%
14/7/2014
60
2.9%
-5.5%
-8.4%
-2.6%
-5.5%
25/12/2014
60
2.7%
2.6%
30.8%
5.3%
33.5%
13/7/2015
94
3.8%
0.0%
2.2%
3.8%
6.0%
23/12/2015
65
2.8%
1.1%
0.9%
3.9%
3.7%
Source: Bloomberg, Gazprombank estimates
Gazprom historical post –dividend performance
EX-DATE
DIV, RUB
DIV YIELD
5D
PERFORMANCE
20D
PERFORMANCE
TOTAL RETURN
5D
TOTAL RETURN
20D
15/5/2006
1.5
0.5%
-14.3%
-20.8%
-13.8%
-20.4%
14/5/2007
2.54
1.0%
2.1%
-0.8%
3.1%
0.2%
05/12/2008
2.66
0.8%
4.5%
-1.4%
5.3%
-0.7%
05/12/2009
0.36
0.2%
-2.0%
2.2%
-1.8%
2.4%
05/11/2010
2.39
1.5%
3.9%
3.6%
5.4%
5.1%
13/5/2011
3.85
1.9%
-1.0%
4.1%
0.9%
6.0%
05/11/2012
8.97
5.4%
-11.7%
-9.2%
-6.3%
-3.7%
14/5/2013
5.99
4.6%
-2.5%
-10.2%
2.1%
-5.6%
16/7/2014
7.2
4.9%
-6.0%
-12.6%
-1.1%
-7.7%
15/7/2015
7.2
4.9%
-3.5%
-3.1%
1.4%
1.8%
Source: Bloomberg, Gazprombank estimates
2
EQUITY STRATEGY
JULY 6, 2016
Norilsk Nickel historical post –dividend performance
EX-DATE
DIV, RUB
DIV YIELD
5D
PERFORMANCE
20D
PERFORMANCE
TOTAL RETURN
5D
TOTAL RETURN
20D
16/5/2007
120
2.4%
0.8%
1.9%
3.2%
4.3%
14/11/2007
108
1.4%
-9.7%
-11.1%
-8.3%
-9.7%
27/08/2008
112
2.3%
-4.1%
-31.9%
-1.7%
-29.6%
24/5/2010
210
4.2%
0.9%
2.4%
5.1%
6.6%
17/5/2011
180
2.5%
-3.5%
-1.5%
-1.0%
1.0%
25/5/2012
196
4.0%
0.5%
7.1%
4.5%
11.1%
05/02/2013
400.83
7.8%
-4.4%
-8.8%
3.4%
-1.1%
31/10/2013
220.7
4.4%
-3.0%
-1.1%
1.3%
3.3%
16/6/2014
248.48
3.6%
-1.1%
4.6%
2.5%
8.2%
19/12/2014
762.34
8.3%
-12.9%
5.2%
-4.6%
13.5%
22/5/2015
670.04
6.6%
-8.0%
-5.1%
-1.4%
1.4%
24/9/2015
305.07
3.0%
-6.9%
-7.9%
-3.9%
-5.0%
29/12/2015
321.95
3.4%
-3.9%
-5.3%
-0.4%
-1.9%
20/6/2016
230.14
2.7%
-0.8%
1.9%
2.7%
Source: Bloomberg, Gazprombank estimates
MTS historical post –dividend performance
EX-DATE
DIV, RUB
DIV YIELD
5D
PERFORMANCE
20D
PERFORMANCE
TOTAL RETURN
5D
TOTAL RETURN
20D
05/10/2006
7.6
4.0%
-5.5%
-16.6%
-1.4%
-12.5%
15/5/2007
9.67
4.0%
2.7%
-2.2%
6.8%
1.9%
05/12/2008
14.84
5.0%
-3.7%
0.3%
1.3%
5.3%
05/12/2009
20.15
11.1%
-8.4%
4.2%
2.7%
15.3%
05/11/2010
15.4
6.2%
0.6%
-6.2%
6.8%
0.0%
05/11/2011
14.54
5.7%
-6.3%
-7.4%
-0.6%
-1.6%
05/11/2012
14.71
6.3%
-7.9%
-1.5%
-1.5%
4.8%
05/10/2013
14.6
5.3%
-5.1%
-6.6%
0.2%
-1.2%
15/8/2013
5.22
1.7%
0.3%
-0.3%
2.0%
1.4%
07/04/2014
18.6
6.9%
-5.7%
-4.5%
1.2%
2.5%
13/10/2014
6.2
2.7%
0.8%
14.2%
3.6%
17.0%
07/06/2015
19.56
8.8%
0.0%
0.2%
8.9%
9.0%
13/10/2015
5.61
2.6%
1.1%
-9.5%
3.7%
-6.9%
Source: Bloomberg, Gazprombank estimates
3
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