DOHA: The 2017 dividend season was a lucrative one for investors as total dividend distribution value increased almost 14 percent for the year over 2016.
Of the 45 companies listed on the QSE, 17 companies increased distributions by an average of 41 percent while 19 companies maintained dividend distribution levels, according to QNB Financial Services (QNBFS).
On the other hand, according to QNBFS 4Q17 commentary, 4 companies reduced dividend distribution values by an average of 14 percent while 5 companies elected not to distribute any dividends.
Much of the overall QSE dividend increases were driven primarily by an increase in the cash dividend distribution vs. one year ago (12 percent) vs. an increase in the share count (2 percent).
The significant dividend growth for 2017 has been seen within the Banking space (+44 percent vs. 2016) led by QNB Group (QNBK) as it increased dividend distribution by 89 percent, partially as a result of bonus shares issued in 2016.
Insurance, Industrials, and Consumer Goods & Services sectors also experienced material increases in dividend payments. Other sectors did not fare well.
For Nonbank/Insurance Financials, IHGS was the only company to eliminate dividends as its market share within Qatari Brokerages declined to the bottom of the list (2.6 percent in 2017).
“Looking into 2018, we are optimistic that this dividend season coupled with a recovery in non-bank profitability would reinforce/bolster Qatar’s image as an attractive dividend yield market in the future”, QNBFS analysts said.
QNBFS highlighted stable margins across select companies with profitability metrics and valuations supportive of potential upside.
“Overall, our analysis favors Consumer Goods/Services and we believe MERS, WDAM, and QFLS screen well. These stocks have demonstrated stable gross/operating margins and improving valuations vs. stable/improving double-digit profitability metrics while having consistent net cash positions that de-risk their balance sheets.
“Combined, these companies trade at an average of 14x . QFLS and WDAM, in particular, are interesting given their net cash position which constitutes 37 percent and 28 percent of their share price value respectively.
This is supportive of future growth potential and/or higher dividend distributions. According to QNBFS, these three companies have also proved resilient to the blockade with an average share price that is marginally up (1 percent) since June 5 (flat YTD).
The Industrials sector overall has exhibited relatively stable margins, valuations, and profitability; however, within the six companies comprising the sector, the picture is mixed. Specifically, QNBFS highlight QIMD and QIGD as its preferred plays. On average, both companies trade at 13x.
Both have seen their share price down 11 percent YTD and while QIMD is flat since June 5, QIGD’s share price has tumbled 42 percent since then suggesting a potential for a significant upside on improving fundamentals.
