HELSINKI: Shareholders of the Finnish companies are being rewarded with higher returns as executives struggle to find better use for the company cash along with the delayed economic recovery.
Half of the companies listed on the Helsinki stock exchange that have so far announced their dividend proposals for 2014 plan to raise them — four times as many as those reducing returns to shareholders, data compiled by Bloomberg show. A minority are still to make a proposal.
Finnish executives are raising dividends faster than profits grow because of excess production capacity and manageable debt levels, according to Jukka Oksaharju, equity strategist at Nordnet AB in Helsinki. High share prices also mean share buybacks are being ruled out by company boards, he said.
“This phenomenon of a rising payout ratio is especially strong in Finland,” Oksaharju said by phone. “Raising dividends is a way for the management to push the problem onto shareholders -– you figure out what to do with this money!”
Worldwide, dividends will grow less than previously estimated to $1.18 trillion in 2015 on dollar strength and a lower oil price, according to the Global Dividend Index compiled by Henderson Global Investors. It had in November forecast growth to $1.19 trillion.
