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Record Russian dividends await

Carnegie Rysslandsfond rose again in May, this time by 3 percent driven by the upcoming dividend season. Many Russian companies are expected to pay out record dividends this summer.

The month’s big winner was Gazprom, which rose sharply after the company announced it will pay out RUB 16.6 per share rather than the expected RUB 10.8. Gazprom is paying out 27 percent of net income for 2018, which means around USD 6 billion. We expect it to move towards 50 percent of net income, which in a few years’ time will mean significantly higher dividends. The share price stood at RUB 163 when the news came, but rose rapidly to over RUB 200. Surgutneftegaz also announced a record dividend. The yield on its preference share is almost 20 percent.

Phosagro reported strong figures for the first quarter, and its cash flow was the highest in many years. The quarterly dividend yield is 3.1 percent, which means more than 12 percent on an annual basis. Steel company MMK also reported fine quarterly numbers, and 100 percent of its strong cash flow will be distributed. The distribution flow from MMK will continue.

Gold company Polyuz demonstrated in the first quarter that its excellent growth continues; it will soon be the world’s largest gold producer. It was encouraging to see that cash flow increased by 43 percent compared to the final quarter last year.

Gazpromneft’s quarterly figures were as strong as expected, again with cash flow exceedingly strong. We expect good dividends in the future. Power company InterRAO also issued an impressive report, with net profit 7 percent higher than expected. However, since the company pays far too little of its profit as dividends, the yield is too low – currently only 4-5 percent. However, there is capacity to pay out much more, and we expect an improvement.

Lukoil’s board approved the agenda for the AGM, including an item to cancel 35 million shares through an offer to buy back stock at a premium to the market price. These 35 million shares correspond to 4.7 percent of equity, and the buybacks will be made during the summer.

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Carnegie Rysslandsfond invests in equities listed in Russia and in other parts of the former Sovjet Union. The region has great natural resources as well as many excitingcompanies in newer...

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