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Dividends are back

Stockholm’s positive momentum continued in September, and much of the year’s losses were recouped by recent days. Although the stock market gains are uneven – many small caps and tech stocks have experienced steep rises while many value stocks and large caps are down – some normalisation is becoming apparent in operations and communities.

Covid is certainly spreading again, and there is plenty to worry about with US elections just weeks away and Brexit back on the cards, but these are things we have known about for a long time and to some extent can manage.

It is what we don’t know that often comes as the biggest surprise.

Happily for Carnegie Sverigefond, several companies have recently chosen to resume their dividends, including construction companies NCC and Skanska, and Essity and Electrolux. The latter also released its results early. These were much stronger than the market expected, and it is fairly clear that we are heading for a very strong reporting season given the circumstances. Falling volumes are being offset by huge cost savings, and just the fact that internal travel and the like have been cancelled will probably save billions more for large companies than we could ever have imagined.

Companies like Sandvik, SKF and Volvo are likely to publish very strong numbers – companies whose factories were largely closed (!) just a few months ago. And if Electrolux now shows strong figures, Dometic will probably do the same given that it is not possible to buy a boat in the whole country and both caravans and motorhomes are seeing enormous demand.

Banks are still struggling with low interest rates, structural challenges and politicians/authorities who do not want them to distribute money, but the question is whether we are quite close to the nadir now that most investors have given up and are simply ignoring banks. And just as in the case of Volvo, there will be dividends in the spring instead, and that will be soon.

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Sverigefond A

Carnegie Sverigefond invests in listed Swedish equities and contains the country’s best and most stable companies. We invest long-term in value companies with sustainable businesses, strong balance sheets and attractive...

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