(BFM Bourse) – The broker eToro carried out a study based on data from Refinitiv to determine the companies which have been able to increase their coupon to their shareholders the most over twenty years. The ranking unsurprisingly recognizes growth stocks.
If the progression of the dividend does not constitute the alpha and omega of stock market appeal, its regular increase is generally well received by the market, because it sends a signal of confidence in the health of a listed group.
Let us remember, because it is always useful, that a dividend does not constitute a “gift” to shareholders but a fraction of the wealth that a company decides to pay directly to its shareholders. Its payment is in theory neutral for the shareholder, because the dividend is detached from the share price (the price of which mechanically falls by the same amount at that time). In other words, he recovers in one pocket what he loses in the other.
In a study published this week, the broker eToro has drawn up a ranking which looks over the (very long) term, via Refinitiv data as of November, the evolution of the coupon. The company has, in fact, sought to draw up a list of the CAC 40 groups which have increased their dividend the most over the last twenty years. Etoro told BFM Bourse that it had “compared the dividends per share paid by the current components of the CAC 40 in 2023 compared to 2003”.
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Teleperformance and luxury at the top
“Instead of focusing exclusively on dividend yields, which only provide limited insight, eToro chose to examine the companies that have increased their dividend per share the most over a 20-year period, considering that this is what can generate significant compound returns,” explains the financial intermediary.
In the end, the ranking, without too much surprise, gives pride of place to growth companies which have experienced enormous growth in their activity or to those which have a solid financial balance sheet with robust cash generation, such as the concessions and construction group. Vinci.
The outsourced customer relations specialist Teleperformance tops the list with an increase in its coupon per share over the last twenty years of 2,165%. If the company has been hit hard on the stock market this year (-45% since January 1) for multiple reasons (including fears that generative artificial intelligence will disrupt its economic model), it nevertheless shows a jump of 190% on 10 years, which allowed it to join the CAC 40 in 2020.
Luxury is, unsurprisingly, well represented given the strong growth experienced by the sector (10% on average since 2016, according to UBS). LVMH is in second place (+1,636%), Hermès is third (+1,536%), EssilorLuxottica, considered a luxury group by some analysts, comes in fourth place (+1,192%), L’Oréal ranks sixth (+650%) and Kering ninth (+567%).
With its development in promising activities, such as highways and airports, Vinci comes in fifth place (+923%). The professional software publisher Dassault Systèmes, seventh (+600%), the spirits group Pernod Ricard, eighth (+581%) and the specialist in energy management technologies Schneider Electric (tenth with +543%) complete the top 10.
“This data shows us that it is the companies achieving the greatest growth in their net income that have increased their dividend distribution the most,” comments Antoine Fraysse-Soulier, head of market analysis at eToro.
The particular case of Unibail
“On the other side of the spectrum, we will find companies which have experienced some setbacks in terms of governance, like Renault, which is however in the process of getting back on track. The companies which suffered the most during the Covid, Unibail Rodamco and even Orange have also reduced their dividends over 20 years,” he continues.
Unibail-Rodamco-Westfield has in fact seen its dividend per share fall by 100% over 20 years, according to eToro data. Which simply reflects the fact that the shopping center operator has suspended the payment of its dividend since 2020 and the pandemic.
Following a conflict which saw the victory of activist investors, notably headed by Xavier Niel, the group’s governance and strategy were reassessed at the end of 2020. Rather than carrying out a capital increase, as desired by the former management, the company wanted to prioritize its debt reduction via asset sales in Europe and the United States. As a result, it also decided not to pay dividends for its 2020, 2021 and 2022 financial years. In June, Goldman Sachs estimated that two additional years without dividends could be necessary for the company to bring its LTV (loan) debt to value, i.e. the financial debt compared to the value of the assets) less than 50%.
Renault (second largest drop in dividend per share over twenty years with -78%) was for its part forced to slash and then suspend its dividend in 2020 (for 2019) and did not pay any in 2021 nor in 2022. But in the light of its good results for the 2022 financial year, Luca de Meo’s “Renaulution” producing its fruits, the car manufacturer has resumed this year the payment of a coupon which is admittedly still relatively modest, of 25 cents per share, compared to 3.55 euros in 2018 (i.e. more than 90% less). But the rapid recovery of its accounts should allow the coupon to increase in the years to come if the group implements its strategy without a hitch.
More surprisingly, the advertising group Publicis is in third place for the largest decline in dividend per share over 20 years, with a decline of 42%. However, the trajectory has been positive in recent years: the coupon went from 1.15 euros per share in 2020 (for 2019 therefore) to 2 euros the following year then 2.4 euros in 2022 and 2.9 euros in 2023 , an increase of almost 50% between 2021 and 2023. And the group has recorded a magnificent stock market performance this year, with a jump of 40% since January 1, fueled by thunderous growth and contract wins. The stock is currently trading at historic highs…
The complete list
The 10 biggest increases in dividend per share over 20 years
- Teleperformance +2165%
- LVMH +1636%
- Hermès +1536%
- EssilorLuxottica +1192%
- Vinci +923%
- L’Oreal +650%
- Dassault Systèmes +600%
- Pernod Ricard +581%
- Kering +567%
- Schneider Electric +543%
The 10 biggest drops (or smallest increases) in dividend per share over 20 years
- Unibail-Rodamco-Westfield -100%
- Renault -78%
- Publicis -42%
- Orange -19%
- Carrefour 0%
- Société Générale +2%
- Saint-Gobain +94%
- Crédit Agricole SA +110%
- Veolia +115%
- STMicroelectronics +150%
Source: eToro, Refinitv
Julien Marion – ©2023 BFM Bourse