Highest dividend yields at Alro Slatina and Alumil

Brokers polled by Wall-Street say that a profitable investment venue would be a mix between first-tier issuers, such as BRD and FICs and second tier issuers such as Alumil and Santierul Naval Orsova.

In the regulated market of Bucharest Stock Exchange, the highest yield of the dividend returned was at Alro Slatina (ALR). The company said yesterday it would pay out a net dividend of 0.24108 lei/share, which raises the dividend yield (DivY) up to 32.88% according to yesterday’s trading quotation.

The news was received with enthusiasm by investors, the shares of aluminum producer scaling up 14.29% yesterday.

Alumil Rom Industry (ALU), Romania’s second largest aluminum producer, said it would pay out a net dividend of 0.2436 lei/share of 9.49 mln lei profit for 2008. The yield of the dividend to be distributed will thus stand at 31.44%.

Both companies in aluminum processing industry marked a lower profit on dwindling demand due to global financial crisis, which was reflected in the value of the dividend up for approval.

Santierul Naval Orsova (SNO) is another major issuer in top of best dividend stocks after it proposed a net dividend of 0.63 lei/share. The value of the dividend remained flat compared to 2007 fiscal year, although the net profit doubled to 15.4 mln lei.

Issuers who said ‘no’ to dividend payout

The companies who decided to withhold the dividend payout for 2008 FY, and to use the profit for reserves or investments are Petrom (SNP), FIC Oltenia (SIF5), Antibiotice (ATB), Zentiva (SCD) and Bermas (BRM).

Nevertheless, the surprise came from FIC Oltenia, who after eight years is considering reallocating the full-year profit for 2008 of 86.74 million lei to own cash resources and not to payout any dividend this year.

The announcement of no dividend payout at Petrom has also dashed investors’ hopes of fresh new income stream for this year thus ending a three-year tradition.

“There is a special characteristic of dividend season afferent to 2008 FY, namely the decision of major issuers to not pay dividends to shareholders and to self finance their activities. There is a dramatic thirst for liquidity on both sides, but in the midst of recessionary times, pulling out cash from the companies’ treasuries would not be the most rational solution”, said Alin Cucos (photo), analyst at Estinvest.

The boardroom of drug maker Antibiotice Iasi said it planned to use the dividends paid out from last year’s profit to fund investments in two production facilities. ATB reported 10.17 mln lei net profit last year, 3.2-fold lower than a year earlier.

Zentiva will take a similar measure, by not offering dividends for 2008 FY, although the net profit of 23.2 mln euro is 5.4-fold higher than a year earlier. This news did not come as a surprise at all, as the company never paid out dividends since its listing.

Dividend: the paramount criteria in choosing stocks

In times of crisis the dividend policy is of paramount importance in investment decision, than in normal conditions, and after the snowballing declines at the stock market, the dividend yields are at highly attractive levels.

“Let’s take for example FICs that over the past few years, the dividends hovered around 0.0500 lei/share. Until a year and a half ago, the dividend was almost worthless, as the FICs’ daily quotas oscillated within 0.1-0.2 range. But now, this dividend means an average annual DivY of over 13%”, said Paul Brendea, analyst at Prime Transaction.

“In current market conditions, anything related to cash is something to worth to invest, but the dividend yield, should be high enough in contrast with the other sectors of the financial market,” said Alin Cucos.

Dividend yield for BSE issuers
Symbol Issuer EPS 2008 Net dividend Allocation rate
Close on March 31 DivY
ALR Alro Slatina 0,3420 0,2410 84,11% 1,3600 32,88%
ALU Alumil Rom Industry 0,3039 0,2436 95,43% 1,4300 31,44%
SNO SN Orsova 1,3485 0,6300 55,62% 5,0500 22,20%
BRD BRD 1,9421 0,7282 37,50% 6,2500 17,62%
SIF2 SIF Moldova 0,1602 0,0378 25,40% 0,4310 15,73%
SIF3 SIF Transilvania 0,0867 0,0252 34,60% 0,2890 15,64%
ARS Aerostar 0,0816 0,0395 57,60% 0,4800 14,73%
TGN Transgaz 20,2645 8,7948 51,67% 116,1000 13,53%
SIF4 SIF Muntenia 0,1134 0,0336 35,27% 0,4800 12,48%
PTR Rompetrol Well Services 0,0891 0,0201 26,94% 0,3250 11,03%
SIF1 SIF Banat-Crisana 0,1602 0,2520 18,73% 0,4810 9,28%
TLV Banca Transilvania 0,3758 0,0394 12,56% 0,7900 8,88%
EBS* Erste Bank 11,4882 2,3121 23,96% 52,000 7,58%
VESY Ves Sighisoara 0,0084 0,0030 35,71% 0,0667 6,66%
UZT Uztel Ploiesti 0,3164 0,2436 91,66% 6,9000 6,22%
MPN Titan 0,241 0,0105 51,87% 0,3690 5,00%
TEL Transelectrica 0,5367 0,2520 55,90% 9,9000 4,47%
CMF Comelf Bistrita 0,0891 0,0315 42,20% 2,5500 2,16%
OIL Oil Terminal Constanta 0,0019 0,0007 47,37% 0,1300 1,01%

*Reported in EUR, calculated in RON at March 31 currency exchange rate
Source: Prime Transaction