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How else to make money on the stock exchange and reduce risk: shares of companies with dividend payment



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In our blog, we write a lot about stock investment options with different risk levels, and talk about ways to protect capital. One of the ways to get extra income with minimal risk is to buy shares of companies that pay dividends.

For example, according to RBC, this year Sberbank may allocate 50% of net profit under IFRS for dividend payments - that is, 422.5 billion rubles. How does it work in practice?

Note : in order to buy shares of companies in order to receive dividends, you will need a brokerage account. You can open it online .

What are dividends?


In simple terms, the purchase of shares of the company, in fact, makes the investor a co-owner of part of the business. So, such an investor is entitled to a part of the profit.

A company whose business is doing well can distribute part of the profit among shareholders (or use retained earnings of past periods for this) - this is dividends.

To receive dividends on shares, it is important to have time to buy them two business days before the shareholders register is closed. That is, if the registry closes on Monday, then on Thursday of the previous week you need to complete the transaction. The registry closing date is determined by the shareholders at the meeting, most often it is appointed either every quarter or for the summer.

For the convenience of determining the closing dates of the registers of different companies, you can use a specializeddividend calendar on our website.

How much can you earn


According to statistics, the profitability of payments of domestic companies is at one of the highest levels in the world - about 6%. According to the evaluation of analysts by the end of 2019 it amounted to 8%. This is significantly higher than the average 3% return on emerging markets and 2.4% on developed ones, including 1.8% in the US and 3.6% in Europe.

A significant number of Russian companies whose shares are traded on the stock exchange increase the amount of dividends. They can do this for different purposes - somewhere, majority shareholders want additional resources, in some cases, issuers seek to increase the attractiveness of their shares.

In 2019 alone, about 10 companies reviewed the dividend policy, including Lukoil, Gazprom, Alrosa, Veon, NLMK, Fosagro, MMK and RusHydro.

What stocks are worth exploring?


In a recent report, ITI Capital analysts examined stocks of companies that pay dividends and selected a list of the top 30 issuers in terms of profitability / risk ratio.

Our favorites for dividend payments are shares of telecommunications operators Veon and MTS - companies of the most volatile global markets, as well as shares of Mosbirzha, Globaltrans and Detsky Mir. In addition to attractive fundamental factors in these companies, we note that the shareholders of the latter two are interested in receiving high dividends.




By clicking on the picture will open in full size. More details in the ITI Capital report

What other investment protection strategies should you use?


Dividend strategies are not the only way to protect investments. Another effective tool is the so-called structural products . Their essence lies in the possibility of choosing acceptable risk parameters. As a result, the risk of financial losses can be completely eliminated. This reduces possible profits, but provides guaranteed protection - in case of unfavorable dynamics of the underlying asset, the company will regain absolutely all of the invested amount.

The profitability of such products may be different and depends on the participation rate and changes in the value of the underlying asset (for example, stocks or index). If you choose a participation rate of 80%, and at the same time, the price of the underlying asset changes in the right direction by 10%, then the income will be 8%. It turns out that investing in the underlying asset itself would be slightly more profitable, then the risk would be much higher. The use of structured products is suitable for conservative and novice investors.

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