Starting in January, investors who focus on dividends will have to alter their strategy. They have been able to avoid paying taxes on the first 1,500 euros in dividends that they earn every year, but the Finance Ministry has nixed this allowance in its hardest hit on dividend taxes in history.
Tax reform will also alter the brackets and withholding applied to savings bonds, which also yield a kind of dividend.
All these taxation changes will prompt companies to flex their dividend strategy, which in some cases means they will pay their traditional January dividend early. January is usually the busiest season for them.
Small stockholders will be most affected by the new tax on dividend payments less than 1,500 euros, and paying dividends early makes the most sense for companies with a large number of Spanish shareholders.
Iberdrola, one company that typically pays one of its dividends in January, has decided to switch to December 19 instead. Sources from the power company say they made this move because "the tax situation for shareholders is more profitable in December than January." Iberdrola will pay scrip dividend (shares instead of cash), but shareholders can ask for cash instead if they make a special request before December 11.
Who typically pays in January? Red Eléctrica, Gas Natural, Repsol, Técnicas Reunidas, Endesa and BBVA are some of the big companies that usually do. Fracisco González's company decided to split its dividend into three payments this year, skipping the January payout, but hoping to reestablish its former policy for the rest of 2015 and pay 0.08 euros per share.
Of all the January dividends, analysts also expect that Repsol will bump its forward to December. The consensus is that it will pay 0.5 euros per share in December, something that Spanish stockholders, which own 48% of the company, will enjoy.
For now, none of the typical January dividends except Iberdrola's has been confirmed, and the markets are speculating about possible new dates. Among the companies seeking to take care of their small Spanish shareholders is Endesa, who payed a dividend recently. Its January dividend could be 0.37 euros per share, representing a 2.5% yield on investment. Técnicas Reunidas could pay 0.7 euros per share for a 1.8% yield, and 66% of its stockholders are Spanish. Gas Natural will pay 1.7 euros per share, and Red Eléctrica will deliver 0.77 euros per share. 40% of the company is Spanish. Lastly, several small companies such as Cie Automotive and Zardoya Otis usually pay in January, but we could see a shift in their thinking as they respond to the new tax.