Wednesday, December 8

Repsol squeezes the dividend to rub shoulders with the greats of Spanish banking


The eagerness to Repsol for rewarding shareholders after the coronavirus pandemic led to a 5 percent increase in the cash dividend.

Along with the buyback of shares that began this Wednesday, the oil company is already rubbing shoulders with the greats of Spanish banking in dividend yield.

According to the twelve-month projection of the analysts’ consensus of Finanzas.com, Repsol offers a dividend yield of 5.63 percent.

This percentage is practically in line with the 5.82 of Santander Bank and far exceeds 4.21 percent of BBVA. It is also higher than 4.72 percent of Bankinter.

Repsol joins the select European buy-back club

The progress of business and the increase in oil prices boosted the oil company’s cash, which is already translating into higher profits for its shareholders. The market did not expect the dividend boost to come so soon.

“The company surprised with a 5% increase in dividends and the announcement to buy back 75 million shares, that is, 5% of the capital stock,” said analysts at Bernstein.

This evolution “brings Repsol to the buy-back club in Europe earlier than initially expected and gives a sign of confidence regarding its strategy, which we like,” these experts added.

“Positive news,” analysts from Sabadell Bank. “We expected an improvement in the repurchase part, but not in the part of the cash payment, which although it was possible, we did not see it as consistent in the long term,” they pointed out at the Catalan bank.

Oil companies accelerate with buybacks

For Repsol, it is important to eat at the same table as financial entities in everything that refers to the dividend. The banks have accelerated the remuneration to their shareholders after months of forced drought, but the oil companies do not want to be left behind and lose investors.

The select buy-back club Bernstein analysts were talking about includes giants like BP, which has just announced an acquisition of its own securities for 1.25 billion dollars.

Norway also joined Equinor, which will buy back its own securities worth 1,000 million dollars, compared to the 300 million it anticipated before the bullish oil explosion. And the same will do TotalEnergies, which will buy back 1.5 billion dollars before the end of the year.

US oil companies, far more used to buybacks than their European counterparts, are also stepping on the gas. A) Yes, Exxon Mobil will invest in the next few years 10 billion dollars to buy back its own securities, while Chevron He also manages millionaire plans.

The market celebrates the start of buybacks

With its decision to increase the dividend and accelerate the buybacks, Repsol is catching up with the great world giants. In a way, both pieces of news reflect the solid macroeconomic environment that the oil company anticipates, analysts at Bloomberg Intelligence told Finanzas.com.

It is true that perhaps it would have been preferable to increase the dividend more than to accelerate the buybacks more, as Alantra analysts explained. But as the company itself recalled, “this policy is not set in stone and we expect the company to review it year after year,” these experts said.

All in all, the market took very well the start of the buybacks this Wednesday, which boosted Repsol’s price by 3 percent. The oil company was coming off its worst streak since March, prompting bear fund ExodusPoint to increase short positions to 0.5 percent.

But Repsol was able to recover the psychological level of 11 euros that it lost just after the presentation of results and now points to 12.87 euros, which is the target price calculated by the consensus of analysts at Finanzas.com.

Exceeding the level of 12 euros is an essential requirement if Repsol wants to think about attacking its all-time highs, but it will not be easy because November is a seasonally negative month, said Josep Codina, head of finance.com analysis.



www.finanzas.com

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