On May 13, 2020, after the close of trading on the Moscow Exchange, news came out about the recommendations of the Board of Directors of PJSC “Phosagro” on the payment of record quarterly dividends for the 1st quarter of 2020.
The dividend per share will be 78 rubles (+ 2.8% of dividend yield to closing price). The closing price on May 13 is 2,752 rubles. In terms of the annual level, the dividend yield may be about 11-12%. Dividend yield is one of the highest not only in the sector, but also as a whole for MOEX Index companies. The effect of the negative impact of coronovirus can only be long-term and several times lower than on companies in other industries.
In 2019, PJSC Phosagro introduced and adopted an updated dividend policy. Fosagro’s dividend policy: over 75% of FCF (free cash flow) will be allocated for dividends if the company’s net debt / EBITDA is less than 1.0x. If the net debt / EBITDA is in the range from 1.0x to 1.5x, 50-75% of the free cash flow will be allocated for payment. If this indicator is above 1.5x, the company will direct less than 50% of free cash flow on dividends. The minimum amount of dividends is set at 50% of adjusted net profit. Dividends are paid on a quarterly basis.
The news is positive, as most Russian public companies either have already reduced dividends for 2019 (final) or for the 1st quarter of 2020, or dividends are expected to decrease by 30-50% in the coming months. Earlier in April, we wrote that the shares of PJSC “Phosagro” are an interesting long-term history (safe haven), which also proved to be a good hedging instrument during the collapse of financial markets in March 2020. This article is available at link. Note that after the publication of the article, stocks rose by more than 10%.
In addition, on May 14, PJSC “Phosagro” will present financial results for the 1st quarter of 2020. Analysts and the market expect the results to be strong, which, ceteris paribus, could be an additional catalyst for stock growth.