by Nino Sunseri
Economic and financial journalist for over 50 years, he started in 1974 at the Giornale di Sicilia. He worked in the roles of news manager and correspondent for Corriere della Sera, La Repubblica and Libero.
Coupon comparison
The latest 3.5 billion ten-year BTP issue was assigned at 4.2%. The yield offered by dividends on the Piazza Affari market is equal to 4.1% according to Bloomberg calculations. It will be on this challenge that much of the 2024 game will be played. The different taxation compared to share coupons has an impact on government bonds. Not to mention, obviously, that the BTP rate is fixed for ten years while the dividends are variable and in the worst case scenario they can even disappear.
The foreseeable fall in rates linked to the fall in inflation will play in favor of equity investment even if the market focus will shift from inflation to the risks of recession. However, already this year the forecasts were marked by great caution, even if the Websim charts indicate a constant: in the years immediately following the rate cut the markets rose. It is no coincidence that in 2023, after the central banks had stopped, the index rose by 25%. A decline in earnings per share is imaginable for 2024 which could be reflected in dividends.
Gabriel Debach speaks (e.Toro)
State-controlled companies which, having a highly indebted shareholder, are forced to extract a lot of value from their assets will certainly be an exception to this rule. This is confirmed by the analysis presented by Gabriele Debach, senior analyst for Italy at e.Toro. He recalls that in the last five years Enel’s return has been 80%. Adjusted for dividends, the return drops to 32%.
Poste arrives 98% with dividends. Without it it stops at 47%
Eni: in five years it returned 48%. Net, it stops at 7%.
The example of Generali
To have a point of comparison it will be enough to remember, adds Debach that one of the big names in the market with Generali offered a return of 14% which with dividends stops at 21%. Well below state-owned companies.
Double-digit returns
Despite the presumable decline in earnings per share, 2024 promises to be generous on the dividend front. There are many stocks that offer double-digit returns even among the big names on the list such as Saras (11%) or Mfes category A (10%). Not to mention absolutely solid companies that offer returns far greater than the BTP: it is the case of Intesa (6.7%), Mediobanca (7.63%), Italgas (6%) or Eni (6.28%).
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