Christian Sec | Stock Exchange Courier
ATX companies are characterized by shareholder-friendly dividend policies.
In recent years, ATX companies have been particularly generous to their shareholders. While corporate profits have only increased by 20% over the past three financial years, dividend payouts have increased by more than 75% to €6.5 billion, according to an analysis by AK. The payout ratio of ATX companies rose from 32% in 2022 to 38% in 2023 and 53% in 2024. 17 out of 20 companies paid a dividend for the past financial year. Even companies operating in the red have continued to pay dividends. For example, CA-Immo is paying €0.80 per share this calendar year despite a group loss. Only Lenzing, AT&S, and Immofinanz did not pay for the past financial year.
Increasing Distributions
Among the most shareholder-friendly companies are the partially state-owned corporations OMV and Verbund when it comes to paying out to their shareholders. In 2024, the oil company paid out a total of around €1.65 billion more in dividends than its annual profit (payout ratio: 112%). With a total dividend payment of €1.4 billion, the payout ratio at Verbund was around 64%.
Banks were also willing to dig deeper into their pockets for their shareholders this year than last year. Bawag spent around 28%, Erste Group around 39%, and RBI around 56% more on dividend distributions than in 2023, although this was offset by corresponding profit growth at least at Erste Group (+38%) and especially at Bawag (+114%).
Continuity Required
The increasing distributions lead to increasing dividend yields. According to Erste Group, the dividend yield of the ATX is currently around 5.6%. In comparison, the dividend yield of the DAX is 2.4% and that of the Euro Stoxx 50 is around 3%.
The highest dividend yield (including special dividend) at the company level in the ATX is currently achieved by OMV at around 12%. This is followed by the financial groups Bawag with 7.8%, Raiffeisen Bank International with 7.2%, and Uniqa with around 7%.
However, a continuously progressive dividend policy is more important than occasionally high dividends. Since 2015, OMV has increased its dividend from an initial level of €1.00 per share to €5.05.
A prerequisite for a stable dividend policy, especially in the industrial sector, is the pricing power of a company, as Alexander Sikora-Sickl from Erste Asset Management explained in an earlier interview with the Börsen-Kurier. Without this, higher costs will soon lead to lower profits or even losses, coupled with a loss of dividends.
A positive example of continuity is Wienerberger. The building materials group focuses not so much on a high dividend yield, but rather on a stable one. Wienerberger has not reduced its dividend for 14 years and now has a yield of 2.8%. With a current payout ratio of 28%, the company also has a cushion to ensure a stable dividend policy.
Over a long period, dividend payments on the ATX account for more than half of the return. This is also shown by the development of the performance index ATX Total Return (with dividend payment) in comparison to the price index ATX. Since the beginning of the millennium, the value of the ATX TR has increased sixfold while the ATX itself roughly tripled.
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ATX Companies: Dividend Champions with Shareholder-Friendly Policies
The Austrian Traded Index (ATX) is known for its strong corporate performance, and in recent years, its companies have also gained recognition as dividend champions. Shareholder-friendly dividend policies have become a defining characteristic of the ATX, with companies consistently increasing their payouts to investors.
Dividend Payouts on the Rise
While corporate profits have witnessed a modest increase of 20% over the past three financial years, dividend payouts have surged significantly. According to an analysis by AK, dividend distributions have climbed by more than 75%, reaching a total of €6.5 billion euros. This generous approach is evident in the rising payout ratio, which climbed from 32% in 2022 to 38% in 2023 and a remarkable 53% in 2024. Notably, 17 out of the 20 ATX companies paid dividends for the past financial year, demonstrating their commitment to shareholder returns.
OMV and Verbund: Leaders in Shareholder Friendliness
Among the most shareholder-friendly ATX companies are the partially state-owned corporations OMV and Verbund. OMV, the oil and gas giant, paid out a total of €1.65 billion more in dividends than its annual profit in 2024, resulting in a staggering payout ratio of 112%. Verbund, the energy company, followed closely with a payout ratio of 64% and a total dividend payment of €1.4 billion.
Banks Increasing Distributions
The banking sector also showcased its commitment to shareholder returns this year. Bawag, Erste Group, and RBI all increased their dividend distributions compared to the previous year. Bawag’s dividend outlay rose by approximately 28%, while Erste Group and RBI saw increases of 39% and 56%, respectively. Notably, this was accompanied by corresponding profit growth, particularly for Bawag (114%) and Erste Group (38%).
Attractive Dividend Yields
The increasing dividend distributions have led to burgeoning dividend yields for ATX investors. Erste Group estimates the current dividend yield of the ATX to be around 5.6%, significantly higher than the 2.4% yield of the DAX and the 3% yield of the Euro Stoxx 50.
Among individual ATX companies, OMV boasts the highest dividend yield (including special dividend), currently at around 12%. Other notable high-yield performers include Bawag (7.8%), Raiffeisen Bank International (7.2%), and Uniqa (7%).
Continuity: The Cornerstone of a Strong Dividend Policy
While high dividend yields are attractive, a consistently progressive dividend policy is considered even more important for long-term investor confidence. OMV, for example, has consistently increased its dividend since 2015, growing its payout from an initial €1.00 per share to €5.05.
According to Alexander Sikora-Sickl of Erste Asset Management, pricing power is a crucial element for a stable dividend policy, especially in the industrial sector. Without it, higher costs might quickly lead to reduced profits, losses, and ultimately, dividend cuts.
Wienerberger: A Model of Stability
Wienerberger, the building materials group, offers a prime example of a company prioritizing a stable dividend policy over high yield. The company has consistently maintained its dividend for the past 14 years, currently boasting a yield of 2.8%. With a moderate payout ratio of 28%, Wienerberger possesses a buffer to ensure a consistent and reliable dividend stream for shareholders.
Long-Term Value Creation
Over the long term, dividend payments have played a significant role in the overall returns generated by ATX investments. The ATX Total Return (ATX TR) index, which includes dividend payments, has increased sixfold since the beginning of the millennium, significantly outperforming the price-only ATX index, which has roughly tripled during the same period.
Key Takeaways
- ATX companies have consistently increased their dividend payouts in recent years.
- OMV and Verbund stand out as leaders in shareholder-friendliness, boasting high payout ratios.
- Banks have also boosted their dividend distributions.
- The ATX currently offers attractive dividend yields compared to other major European indices.
- Continuity in dividend policy is paramount for long-term investor confidence.
- ATX investments, especially those with dividend payouts, have generated significant returns over the long term.
Note: This information is intended for general knowledge and informational purposes only, and does not constitute financial advice. Investors should consult with a qualified financial advisor before making any investment decisions.
