TASE-listed Companies Distributed NIS 26.3 Billion Dividends in 2017 Yuval Tsuk, Research Department

TASE-listed Companies Distributed NIS 26.3 Billion Dividends in 2017 – the Highest Amount Since 2010, of which NIS 14 Billion to the Public
Dividend yield came to 3.3%, the highest since 2011
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A record 44% of TASE-listed companies distributed dividends
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Oil & gas exploration companies stood out this year with distributions of NIS 6 billion and a dividend yield of 18%
 
Companies with shares traded on the Tel Aviv Stock Exchange (TASE) distributed dividends equaling NIS 26.3 billion in 2017 – the highest amount distributed since 2010, when NIS 27.4 were distributed. The total amount of dividends distributed in 2017 was more than 50% higher than 2016 distributions.
 
Approximately NIS 14 billion, some 54% of the amount distributed, were paid out to the public, while the remainder was paid to principal shareholders.
 
The distributions were made throughout the year by 201 TASE-listed companies. The number of distributors   comes to 44% of the total number of TASE equity listings, setting an all-time record in the proportion of TASE-traded dividend-distributing companies.
 
The share of companies which consistently distribute dividends in 2017 rose relative to the previous two years, with a 70% of the distributors (139 companies) distributing dividends three years in a row, and a 51% of the distributors (102 companies) distributing dividends four years in a row.
 
2017 dividend yield put an end to the downward trend of average dividend yields posted over the previous seven years, in which average yields retreated from 3.6% in 2010 to 2.0% in 2016. The average dividend yield in 2017 came to 3.3%, the highest since 2011.

Table 1: Select Data Regarding Dividend Distributions, 2011-2017

 
 
 
2011
2012
2013
2014
2015
2016
2017
Number of distributing companies
211
156
177
169
182
181
201
% of distributing companies relative to total TASE equity listings
37%
29%
35%
36%
39.5%
40.1%
44.0%
Amount distributed (billion NIS)
23.9
18.0
18.7
18.8
19.6
17.4
26.3
Average dividend yield
3.4%
3.0%
2.9%
2.6%
2.2%
2.0%
3.3%
Average annual market cap of TASE-listed companies (billion NIS)
 
692
594
649
739
907
871
806
Dividend distribution – by key TASE share indices
TA-35 index
 
In 2017, 26 of the 35 TA-35 index constituents (as of the end of 2017) distributed dividends, totaling NIS 17.3 billion (66% of all dividends). This is in comparison to the NIS 12.1 billion distributed by the same companies  in the previous year (a 43% increase). Approximately 90% of the cash dividends distributed in 2017 were distributed by companies, which were constituents of the TA-25 index prior to the implementation of TASE’s index reform, which went into effect in February 2017. (All of which were also TA-35 constituents at the end of 2017, except for Avner which merged with another index constituent, Delek Drilling).
 
The percentage of dividends distributed by the constituents of the former TA-25 index came to 59% of total distributions, as opposed to 65% in 2016. This is the lowest proportion distributed by the index companies for more than a decade, reflecting the decrease in dividend distribution concentration by large-cap companies.
 
The dividend yield of TA-35 index shares came to 3.1% in 2017.
 
The most prominent dividend yields among TA-35 constituents belong to the oil and gas partnerships, Isramco (22.3%) and Delek Drilling (17.8%), as well as Harel Investments (10.3%), Delek Group (9.2%) and Bezeq (8.4%).
 
 
TA-90 index
68 of the 98 TA-90 index constituents (at the end of 2017) distributed dividends totaling NIS 5.5 billion (21% of total distributions) in 2017.
 
The 2017 dividend yield for TA-90 companies came to 3.5%.
 
The highest dividend yield among TA-90 index constituents belongs to Discount Investment (27.7%), to car importers Delek Automotive (14.4%) and Carasso Motors (13.0%), and to Naphtha (12.3%).
 
Tel-Div index
The shares comprising the Tel-Div index at the end of 2017 posted a 5.5% dividend yield, the highest since 2013.
Major Dividend Distributors
·                  2017 was not an easy year for Teva, and for the first time, it had to reduce dividends on its ordinary shares. Starting from the second half of 2017, Teva cut its dividend per share by 75% relative to the previous ten quarters. Despite this, Teva again topped the list of dividend distributors, for the fifth year running, paying out NIS 4.1 billion – of which NIS 3.2 billion to ordinary shares holders and NIS 0.9 billion to preferred shares holders. This compares with the NIS 5.3 billion in 2016 (NIS 5.1 to ordinary shares holders and NIS 253 million to preferred shares holders), and NIS 4.5 billion in 2015 (ordinary shares).
 
Teva’s dividend yield rose from 2.2% in 2015 to 2.8% in 2016 and 3.3% in 2017. The primary reason for the yield increase is the sharp drop in Teva share prices of 44% in 2016 and 51% in 2017 (the cumulative two-year loss comes to approximately 73%).
 
·                Second, third and fourth place on the list goes to the oil and gas partnerships, Delek Drilling and Isramco, as well as to Delek Energy, which distributed an unusually large portion of their earnings in 2017.
 
Delek Drilling distributed NIS 2.2 billion (together with Avner, which distributed NIS 0.6 billion prior to their merger in May, 2017 – NIS 2.8 billion), and posted a dividend yield of 17.8%. One of the primary sources for dividend distribution in 2017 was the receipts from the Tamar Petroleum offering, which raised NIS 2.3 in a public bond offering and a private placement of shares to institutional investors of approximately NIS 700 million.
 
Delek Energy, which received NIS 1.5 billion dividends from its subsidiary partnerships, Delek Drilling and Avner, distributed dividends, for the first time in its history, of NIS 1.3 billion and posted a 14% dividend yield.
 
Isramco distributed dividends totaling NIS 2.1 billion, of which NIS 1.8 billion in June, which constituted all the partnership’s distributable earnings and was financed by a debt offering of NIS 1.6 billion immediately following the completion of the merger with the I.N.O.C Dead Sea and Naphtha Explorations partnerships. Due to the extraordinarily large distribution, Isramco’s dividend yield came to 22.3%.
 
·              Bezeq distributed dividends of NIS 1.3 billion in 2017, as opposed to NIS 1.4 billion and NIS 1.8 in 2016 and 2015 respectively. In wake of the difficulties in which Eurocom, a principal shareholder, is in and the investigation and arrests carried out against controlling shareholders and corporate officers, Bezeq changed its dividend policy, and beginning in 2018 it  is expected to distribute dividends equaling 70% of net earnings (as opposed to 100% under the previous policy) semi-annually.
 
·              Israel Chemicals distributed NIS 872 million cash dividends in 2017 as opposed to NIS 620 million in 2016. The company’s board of directors decided to update its dividend policy in May 2016, such that dividends will be  payable up to 50% of annual net earnings (as opposed to 70% under the previous policy), in order to strengthen the company’s financial position and in light of the continuing volatility and uncertainty in the agricultural commodities market.
 
·              Bank Hapoalim continued raising the percentage of its distributed earnings, in light of the  sustained improvement of its capital adequacy, setting a new dividend policy of distributing 40% of net quarterly earnings starting in 2017 (instead of 30% of net earnings prior to this). The bank increased total distributions gradually each year, from NIS 277 million in 2013 to NIS 861 million in 2017.
 
·              Discount Investment, which has not distributed dividends since 2014, paid out NIS 678 this year, generating an unusually high dividend yield of 27.7%. I.D.B. Holdings, Discount Investment's controlling shareholder until November 2017, received 73% of the dividends, which helped it redeem debt to its bondholders.
 
·              Bank Leumi started to distribute quarterly dividends in 2017, for the first time since 2011, after adopting a dividend policy in the first quarter of distributing 20% of net earnings quarterly, which by the fourth quarter rose to 40% of net earnings following the bank’s ability to meet capital adequacy targets. In total, the bank distributed dividends of NIS 628 million this year.
Dividend distribution – by sectors
The highest sectoral dividend yield this year belongs to the energy, oil and gas sector (14.0%), due primarily to the high dividends distributed by the oil and gas partnerships, Delek Drilling and Isramco, as well as by the Delek Energy. This follows the previous year in which the sector had the lowest dividend yield of all TASE sectors. The dividend yield of oil and gas exploration companies and partnerships alone came to 18.1% in 2017.
Oil Refineries, which has not distributed dividends since 2010, despite its adoption of an annual dividend distribution policy, paid dividends of NIS 325 million in 2017.
·                  The second highest sectoral dividend yield (5.1%) goes to two sectors: commerce & services and investments & holdings.
In commerce and services, Bezeq can be credited for the above-average yield, following its NIS 1.3 billion distribution, as can Delek Automotive (NIS 424 million) and Carasso Motors (NIS 355 million).
In the investment and holdings sector, the favorable dividend yield can be attributed primarily to the Delek Group (NIS 780 million) and Discount Investment (NIS 678 million).
·                  The financial services sector maintained a relatively high sectoral dividend yield (4.2%), given that 12 of the 15 companies comprising the sector distributed dividends this year.
·                  Banks distributed dividends of NIS 2.3 billion in 2017, bringing the sectoral dividend yield to 2.4%, the highest percentage since 2007 (4.7%). This yield results from the fact that most banks met their regulatory capital adequacy requirements, as reflected in the increase in distributions by Bank Hapoalim, Bank Mizrahi-Tefahot, the First International Bank of Israel and F.I.B.I., as well as Bank Leumi, which resumed its distributions after a six-year hiatus.
Bank Discount, which has not distributed dividends since 2008, adopted a quarterly dividend policy towards the end of 2017 of 15% net earnings starting in the first quarter of 2018. Despite the new policy, Discount did not distribute dividends in this quarter.
 

Table 2: Sectoral comparison of dividend distributions, 2016-2017

(NIS million)
 
 

2016

2017

Sector
No, Distributors
Amount Distributed
Sectoral Dividend Yield
No. Companies in Sector
No. Distributors
Amount Distributed
Sectoral Dividend Yield
Banks
5
1,180
1.5%
9
7
2,327
2.4%
Insurance
2
271
1.6%
7
4
761
3.5%
Financial Services
10
219
6.1%
15
12
270
4.2%
Biomed
3
5,699
1.5%
55
3
4,420
1.7%
excluding Teva
2
379
0.2%
54
2
330
0.1%
Technology
23
1,047
1.5%
74
24
1,093
1.3%
Commerce & Services
33
3,004
5.2%
66
34
3,004
5.1%
Real Estate
43
2,744
3.0%
96
50
3,336
2.9%
Manuf.
42
1,844
2.7%
65
40
2,514
3.3%
Investment & Holdings
14
840
2.6%
46
17
1,856
5.1%
Energy, Oil & Gas Explor.
6
690
1.3%
24
10
6,750
14.0%
TASE total
181
17,537
2.0%
457
201
26,330
3.3%
 
 
 Table 3: Highest Dividend Yields among TA-125 index constituents in 2017
(NIS million)
 
 
Company Name
Sector
Total Dividend 2017
Dividend Yield
Discount Investment
Investments & Holdings
678
27.7%
Isramco
Energy, Oil & Gas
2,062
22.3%
Delek Drilling
Energy, Oil & Gas
2,245
17.8%
Delek Automotive
Commerce & Services
424
14.4%
Carasso
Commerce & Services
355
13.0%
Methodology
The data in this review is drawn from the cash dividend distribution filings submitted by TASE-listed companies and posted on TASE’s “Maya” website, and were calculated according to the date of actual payment  in each one of the years reviewed.
 
The data for each year do not include dividends distributed by companies that have delisted their shares during the course of that year. In 2017, the data does not include earnings distributions by Avner of NIS 610 million that were made prior to its merger with Delek Drilling.
 
In addition, the data does not include dividends in kind distributed by TASE-listed companies.
In 2017:
-        Distribution of Kardan shares by Kardan Israel, valued at NIS 63 million.
-        Distribution of Rapac shares by Inter-Gama, valued at NIS 79 million.
-        Distribution of Netz Hotels shares by the Netz Group, valued at NIS 46 million.
 
In 2016:
-        Distribution of Shagrir shares by Pointer, valued at NIS 50 million
 
Total and sectoral dividend yields are calculated according to average market cap at the beginning and end of the year.
 
Dividend yields of individual companies are calculated according to the ex-dividend share price.
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