Keeping a promise to pay the shareholder is not an easy job when companies do not have a clear picture of their results. In the past few months, analysts have witnessed a significant deterioration in earnings predictions, and this indicates an underlying problem for companies: they will earn less than predicted, but are bound to pay set dividends to shareholders. At this time, 23 companies on the Ibex 35 (68% of the index) will have to apportion more than half of their profits to shareholder dividends.
This figure itself does not say much. Looking back, corporate pay outs (the percentage of profits allocated to dividends) have not surpassed 50% in this many companies ever before. The highest figures were seen in the last two years; 21 companies parted with more than half of their earnings. The number of companies who did so in previous years is even smaller.
Some will ask: If shareholders are receiving more, does that mean that the companies are simply increasing their dividends? No, at least not always. That companies have to try harder to pay dividends to shareholders means that they earned less than expected. Indeed, the earnings predictions for companies on the Ibex have fallen 6.6% since the beginning of 2011.
So it is not strange that the picture has also changed with respect to the percentage of profits that end up in shareholders? hands. When 2011 began, according to Fact Set, analysts agreed that 18 companies would pay out more than 50% of earnings. The number of companies rose by 5 since then.
