Rosneft versus Sberbank: whose dividends are better

The two largest companies in Russia by market capitalization - Sberbank and Rosneft - announced the amount of dividends for 2018 on the same day.

Who is bigger?

• Sberbank recommended paying 361.3 billion rubles in dividends, which is a third more than in 2017.
• Rosneft - 274 billion rubles (including 154 billion rubles paid for the first half of the year) - an increase of 2.5 times.

But if we count it as a percentage of net profit, Rosneft is in the lead. It will give shareholders exactly half of the profit according to IFRS versus 43.45% for Sberbank.

Quote. “This is the highest dividend in terms of total volume in the history of Russian companies. I hope this is the surprise that investors have been waiting for,” said Sberbank President German Gref.

How much will the state receive?

The controlling shareholder of Rosneft is the state-owned Rosneftegaz (50% plus 1 share). He will receive dividends from Rosneft, but how much he will pay to the state in the form of his own dividends is unclear: Rosneftegaz does not publish reports and has long been considered a reserve budget, which is controlled directly by the president. Thus, from the budget of Rosneftegaz, on Putin’s instructions, the Zvezda shipyard in the Far East (about 146 billion rubles), the PD-35 civil aircraft engine, the electrification of Kaliningrad and even four new cultural centers were financed. In 2017, Rosneftegaz paid the state only 33 billion rubles - half what it received for its stakes in Rosneft, Gazprom and Inter RAO.

Sberbank is controlled by the state through the Central Bank. The regulator will transfer 180 billion rubles of bank dividends directly to the budget. True, the federal budget for this year includes 209.5 billion rubles, that is, a little more than half of its profit. The state bank will pay 50% of profits according to IFRS when it reaches a capital adequacy of 12.5%, Gref explained.

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Who paid more?

• Rosneft has been paying shareholders half of its net profit for only the second year: at the end of 2017, the amount of dividends amounted to 111 billion rubles. At the end of 2016, the company paid only 35%, or 63.4 billion rubles.
• Sberbank paid 36.2% of profits for 2017 and 25% for 2016, but in absolute terms this is significantly more than Rosneft: 271 billion and 136 billion rubles, respectively.

What about dividend yield?

Both Sberbank (7% for ordinary shares) and Rosneft (6%) are among the top Russian blue chips in terms of this indicator.

What about capitalization?

Rosneft looks much better - like all exporters, it benefited from the devaluation and last year's oil rally. At the end of 2018, the shares of Novatek (61.8%), Tatneft (39.8%), Lukoil (39.1%), Rosneft (35.5%), and Surgutneftegaz increased in price the most. "(34%), "Alrosa" (31.5%).

Sberbank fell in price by 15.6% over the past year. But the situation may change in 2019: the raw materials sector will be among the laggards or at least not among the leaders due to the strengthening of the ruble, says Otkritie Broker analyst Timur Nigmatullin. “Now the securities of large developers who will become beneficiaries of the shared construction reform due to the fall in competition, agricultural assets led by Rusagro, and the financial sector led by the Moscow Exchange look interesting,” he believes.

What are investors?

After the news about dividends was released on Tuesday, Rosneft's quotes rose by 1.5%, but Sberbank investors did not appreciate the record - the bank's shares fell by 2%.

Read also Sechin will have to shrink: why Rosneft is cutting costs for the first time in many years

What about taxes?

Rosneft Chief Executive Officer Igor Sechin considers his company the largest taxpayer in Russia (4 trillion rubles in the consolidated budget in 2018). Due to the peculiarities of taxation of the Russian oil industry, even Gazprom cannot compare with Rosneft, not to mention Sberbank (215 billion rubles).

What's next?

In 2017, Sberbank adopted a dividend policy of increasing the amount of dividend payments to 50% of net profit under IFRS with a capital adequacy of 12.5%. According to Gref’s calculations, Sberbank will reach this figure in 2020. Putin personally recommended that Sechin pay 50% of profits in the form of dividends.