Getting stock selection right is not always easy. In an environment of unpredictable waters, where the comings and goings of the stock markets are conditioned by the moderation of prices and rises in interest rates, the dividend yield can serve as a guide. Within the Eurozone, the Spanish parquet stands out, in which the Ibex 35 is seen as the second index that offers the highest return to investors with 3.4%.
The ratio exceeds the average of the Eurostoxx 50 (3.2%), which includes the 50 companies in the single currency area with the highest market capitalization and in which the heavyweights of the Madrid parquet are listed: Iberdrola, Banco Santander , BBVA and Inditex. The only one that resists him ahead is the Italian FTSE MIB, which already accumulates a dividend yield of 4% and competes directly with the Madrid place for the podium.
Analysts are confident that companies continue to tighten their dividend policies. Thus, taking into account the forecasts for 2023, the dividend yield scales to 4.5%, compared to the current 3.4%. In the case of the Italian index, the expectation is that it exceeds the 5% level considering the results that will continue this year. In the last three years, the Madrid stock market has competed for this leadership with the Italian one, surpassing the average of the 50 largest companies by market capitalization in the single currency area, with differences of up to half a percentage point.
Looking ahead to this year, the ‘Bloomberg’ consensus calculates that the Eurostoxx 50 can give a return to its shareholders of 3.4%, in line with the estimate for the DAX 40 (3.3) and the CAC 40 (3 .2%), given that the horrible composition of this European index is made up mostly of French and German stocks.
The circumstance occurs that the Ibex and the MIB are the ones that rise the most of the main markets of the Old Continent. After the brake this Friday, the first advances 11.8% since last January and the second 13.8%. This ‘acceleration’ does not prevent them from being the ones with the greatest twelve-month potential, with the possibility of closing the year with an additional advance of 14% and 18.4%, respectively.
The downside is that inflation remains well above it to date. According to the latest data from Eurostat, the CPI rate in the euro area stood at 8.6% in January, although it represents a moderation for the third consecutive month and its lowest figure since last June 2022, double the average yields obtained between January and so far in February.
The bank pulls the profitability of the Ibex 35
In the case of Spain, the driving force behind dividend yields is the banking sector. In addition to being, together with the energy companies, the ones that exert the greatest influence in the selective due to high representation, with a weight of approximately 30%, this sector has not only defended its shareholder remuneration as soon as the European Central Bank (ECB) has raised its hand , but it has also reinforced it, raising the ‘pay-out’.
Among them is Banco Sabadell, which has gone from distributing 31% to 50%, as announced in the presentation of its annual results. The average of the six reference entities ranges between 40 and 60%, a percentage that will increase throughout 2023 after the sector’s race to increase this item to attract investors. As this medium has published, one of the last to make a move in this regard could be Banco Santander. From Credit Suisse they aim to raise it to 60%.
