Yield-seeking investors search the equity landscape

Greek investors are searching the equity landscape for attractive dividend yields following the market’s sharp, 17.6-percent slide to October 1998 lows after the attacks against the USA. With commercial banks slashing savings deposit rates to 2.0 percent after the European Central Bank’s (ECB) 50-basis point (0.5 percent) cut last week and interest income taxed at 15 percent, real rates are negative compared with an inflation rate of 3.8 percent in August. But according to Selas Investments, 86 stocks offer trailing dividend yields of more than 4.0 percent based on last Friday’s close. As a result of the recent hammering of share prices, some yields are as high as 25.3 percent based on fiscal 2000 dividends. It (dividend yield) is one factor that gives buyers a certain degree of security, providing a cushion to the downside, said broker Costas Karydis at DF Securities in Athens. But, he said, attractive dividend yields have to be weighed against the prospect of a recession which may be felt more by certain sectors such as primary input producers. A global economic slowdown may affect demand, output and profitability, which very likely will have an impact on dividend policy, Karydis said. Based on Friday’s close of 26.16 euros, Aluminium of Greece, a Pechiney subsidiary, stands out with a trailing dividend yield of 9.93 percent. The company posted group pretax earnings growth of 16.6 percent in the first half. Another recession-defensive stock, cigarette maker Papastratos, has a trailing dividend yield of 8.26 percent. Index heavyweight OTE, which has outperformed during the slide, offers a dividend yield of 4.09 percent. Bank shares, which traditionally reward shareholders with attractive dividends, have trailing yields above 4.0 percent, more than available from repurchase agreements, which have slid to below 3.75 percent currently. Banks should pretty much be able to pay fiscal 2001 dividends around last year’s levels. We don’t expect a substantial drop, said broker Nick Diamantopoulos at Kappa Securities. Looking at trailing dividend yields of large Greek banks, Bank of Cyprus offers 5.09 percent, followed by Alpha Bank with 4.9 percent, Commercial Bank with 4.88, National Bank with 4.78 percent, and EFG Eurobank with 4.59.

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