Shareholder remuneration hits its highest levels since 2014 due to the surge in buybacks

The distribution of dividends has become one of the emblems par excellence of the Spanish stock market. With an average profitability of around 4% in the last 35 years, the remuneration through Via has exceeded 27,400 million during the last Eleven Months, ALMOST 19% more compared to the previous year, and its highest figure since 2019 , when it slightly exceeded 30,544 million. To this amount we must add share buybacks and their subsequent amortization, a very widespread formula in the United States that has little by little been gaining weight in Europe and, within this region, in Spain.

Although this year the amortization of securities has remained below the annual record of 14,437 million in 2022, with a total of 11,823 million until September through 27 operations, overall, the shareholder remuneration has broken a new record. Adding this item to the dividends that will be paid throughout 2023, the remuneration to investors will “widely” exceed 40,000 million, the second best figure in the entire historical series. We must go back to 2014, when a total of 44,315 million were distributed to find the best data, according to the information released by Spanish Stock Exchanges and Markets (BME).

This figure is distorted by the extraordinary payment approved by Endesa of more than 14,000 million that it paid that year as a result of the sale of assets in Latin America to its parent company Enel. “Listed companies have taken advantage of the solid performance of results and the large liquidity positions accumulated during the pandemic to increase shareholder remuneration for another year,” they defend from BME. In this sense, the average profitability ratio has increased six tenths between January and October 2023, up to 4.6%, one of the highest in Europe, behind Germany, which reaches 5%. However, the figure is higher than that of the British park (3.9%), French (3%), Italian and American, both with a percentage of 1.6%.

At the end of November, 58 of the 85 companies included in any index of the Ibex family had distributed dividends. Of them, almost twenty offer the shareholder a return of 5% so far this year, placing them above the average. Looking only at the Ibex 35, Enagás leads the ranking, with a return for investors that was around 11% at the close of this Wednesday. Specifically, the gas company will pay its shareholders this Friday more than 182 million at a rate of 0.69 euros per share.

At a sector level, it is the banking sector that takes center stage within the Spanish stock market reference with percentages ranging from 10.4% of CaixaBank to 5.34% of Banco Santander. Among the media there are also prominent companies such as Telefónica (8%) and Mapfre (7.98%). Financial entities have consolidated share purchases during 2023, a formula that until a few months ago they barely used, with BBVA and Banco Santander being the pioneers in this regard with the aim of retaining shareholders and complementing the traditional cash dividend. In fact, these two firms together with CaixaBank have amortized more than 4,000 million, half of the amount executed through this means.

In addition to being characterized by its high generosity, the Spanish stock market reference excludes the payment of dividends from its capitalization. This has caused a gap of more than 23,000 points between the index itself and the ‘total return’. Thus, while the Ibex 35 is currently moving above the 10,000-10,100 barrier, the Ibex with dividends has shattered maximums this year after reaching the level of 33,000.