Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Dow Stock Market Dow Trend Forecast Current State - 22nd Apr 21
Gold Rebounds Amid Positive Economic Reports - 22nd Apr 21
China's record first quarter fuels strong expansion in 2021 - 22nd Apr 21
Gold Price Next Key Level - 22nd Apr 21
Here's What to Look For When Hiring a Real Estate Agent - 22nd Apr 21
Ethereum EIP 1559 and Raven Coin - 21st Apr 21
Gold, USDX: The Board is Set, the Pieces are Moving - 21st Apr 21
World Economies Need to Find a Lot More COPPER! - 21st Apr 21
DogeCoin CRASH! Time to Start Mining BOODGIE Coin! Crypto Mania 2021 - 21st Apr 21
Pausing Stocks and Gold Fireworks - 21st Apr 21
Precious Metals and Miners Start of New Longer-Term Bullish Trend - P2 - 21st Apr 21
Looking For A Mortgage Broker? Here Is How To Hire One - 21st Apr 21
Amazon AMZN Stock PRIMEDAY SALE! Trend Analysis - 20th Apr 21
Stock Market Sentiment Speaks: You May Not Believe My 2021 Targets - 20th Apr 21
Stock Market Phase Two Projection - 20th Apr 21
Are Precious Metals & Miners Starting A New Longer-Term Bullish Trend? - 20th Apr 21
Inflation: First the Gain, Then the Pain… - 20th Apr 21
8 Stock Market Indicators in 1: Here's the Message of the Panic/Euphoria Model - 19th Apr 21
Gold - You Can Win a Battle, but Still Lose the War - 19th Apr 21
Will Interest Rates Rally Further Push Gold Price Down? - 19th Apr 21
Gold Fireworks Doubt the Official Inflation Story - 19th Apr 21
YuanPay Team Discuss The Process Of Crypto Diversification - 19th Apr 21
Central Banks May Ramp Up Gold Buying - 18th Apr 21
How to Get Rid of Driveway Weeds With Just WATER! 6 Months later NO Weeds, Ultimate Killer! - 18th Apr 21
State of the European Markets - DAX, FTSE, CAC, AEX, SMI, IBEX 35, S&P/MIB, Euro Stoxx 50, RTS - 18th Apr 21
Einvestment Fund: What You Need To Know About Investments - 18th Apr 21
Google Alphabet (GOOG) AI Deep Mind Stock Trend Analysis - 17th Apr 21
Stocks and Bonds Inflationary Slingshot - 17th Apr 21
Best Smartphone Selfie Stick Tripod Review by ATUMTEK Works with Samsung Galaxy and Iphone - 17th Apr 21
How to Give Budgie's First Bath | Easy Budgie Bathing and Water Training with Lettuce - 17th Apr 21
Record-breaking Decrease in New Passenger Vehicle Sale in Europe - 17th Apr 21
US Stocks Climb A “Wall Of Worry” To New Highs - 16th Apr 21
Gold’s Singular Role - 16th Apr 21
See what Anatomy of a Bursting Market Bubble looks like - 16th Apr 21
Many Stock Market Sectors Are Primed For Another Breakout Rally – Are You? - 16th Apr 21
What Skyrocketing US Home Prices Say About Inflation - 16th Apr 21
Still a Bullish Fever in Stocks? - 16th Apr 21
Trying to Buy Coinbase Stock on IPO Day - Institutional Investors Freeze out Retail Investors - 15th Apr 21
Stocks or Gold – Which Is in the Catbird Seat? - 15th Apr 21
Time For A Stock Market Melt-Up - 15th Apr 21
Stocks Bull Market Progression Now Shows Base Metal Strength - 15th Apr 21
AI Tech Stocks Buy Ratings, Levels and Valuations - 14th Apr 21
Easy 10% to 15% Overclock for 5600x, 5900x, 5950x Using AMD Ryzen Master Precision Boost Overdrive - 14th Apr 21
The Current Cannabis Sector Rally Is Pointing To Another Breakout - 14th Apr 21
U.S. Dollar Junk Bond Market The Easiest Money in History - 14th Apr 21
The SPY Is Nearing Resistance @ $410… What Is Next? - 14th Apr 21
The Curious Stock Market Staircase Rally - 14th Apr 21
Stocks are Heating Up - 14th Apr 21
Two Methods in Calculating For R&D Tax Credits - 14th Apr 21
Stock Market Minor Correction Due - 13th Apr 21
How to Feed Budgies Cucumbers - Best Vegetables Feeding for the First Time, Parakeet Care UK - 13th Apr 21
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

How to Profit From Putin’s Russian Dividend Stocks Plan

Companies / Investing 2013 Oct 13, 2013 - 06:31 PM GMT

By: Investment_U

Companies

David Fessler writes: Most income-oriented investors don’t have Vladimir Putin’s name in mind when searching for high-yield stocks. Perhaps they should.

In November 2012, Russia’s strong-arm leader began requiring that state-owned companies pay a minimum 25% of profit as dividends. The dividend plan, combined with the fact that Russian energy stocks are currently trading at bargain prices, makes for an appealing opportunity.


Although 11 of the 17 Kremlin-backed companies included in the MICEX (Bloomberg’s Russian stock index) have so far flouted the rule, one can ignore Vladimir Putin only for so long.

He is not taking no for an answer.

“We’ve started to take a tougher stance on companies’ dividend policy,” remarked Igor Shuvalov, Putin’s first deputy prime minister. Shuvalov is the man in charge of enforcement, and next year state-owned companies will need his approval for an exemption from the 25% payout rule.

Why the pressure? Larger dividends would mean higher market values for the state-owned companies.

Right now, they trade for peanuts. The MICEX trades at just 4.9 times estimated earnings. That’s the lowest of all 21 emerging markets tracked by Bloomberg.

A Little Corrupt

Russian stocks are so cheap because investors worry about the country’s reputation for corruption.

Russia ranks 133rd out of 176 countries on Transparency International’s 2012 index on corruption. Investor protection is always a concern when investing in Russia. Not surprisingly, conservative investors tend to give Russia a wide berth.

Still, for energy investors in particular, Russia is worth a hard look. Russia is the world’s largest producer of crude oil in the world outside of OPEC (at least until the United States overtakes it, perhaps by the end of the year). It pumps roughly 10.8 million barrels of oil per day.

It’s no slacker when it comes to natural gas either. It produces 2 billion cubic feet per day. Much of Russia’s natural gas heads to Europe. It’s also selling to China.

Russia’s inflation is relatively tame (6.5%) compared to other emerging markets. Its energy companies have a reputation for corporate profitability.

And a few Russian energy companies look like bargains, at least in the short term. Many Russian energy stocks have always traded for a song compared to their Western counterparts. Now, they’re trading at discounts relative to their own long-term averages.

But the biggest reason to invest in Russian energy stocks is Putin’s dividend plan. Russia is already the second-largest dividend payer overall in the WisdomTree Emerging Markets Equity Income Index.

It’s also the fastest growing. Russia regularly runs a trade surplus, fueled by oil. Since 2000, Russia has banked $509 billion in currency reserves. That’s the third-largest in the world.

Most of it’s from the sale of oil and natural gas. Its massive reserves are the main reason state-owned companies made it through the Great Recession of 2008-2009 unscathed.

Russia’s own ruble is a much stronger currency than those of many other emerging markets. High oil prices will continue to fuel the Russian economy.

Russian oil production could level off at the beginning of 2016. At that point, oil and gas company profits could begin to level off or even decline. But we’re interested in short-term opportunities.

How to Play It

Most investors might want to avoid individual Russian equities. A better way to invest in the country is through exchange-traded funds.

Right now, Russian ETFs look relatively cheap. The most popular Russian ETF is the Market Vectors Russia ETF (NYSE:RSX). Energy makes up 44% of its portfolio of about 50 stocks.

If you want more exposure to energy, the iShares MSCI Russia Capped ETF (NYSE: ERUS) might be a better bet. This ETF holds just 25 stocks. Energy makes up 55% of its portfolio.

Lately, many emerging markets have been struggling, with stock indexes facing mounting loses. In comparison, the Russian market has avoided much of the global selling pressure.

Russia’s fiscal position is solid. Its strong crude oil and natural gas exports will continue to add to its currency reserves, at least through 2015. And Putin’s policies are bullying, but dividend-seeker-friendly.

Taking all of the above factors into account, I believe Russia could be another energy outperformer, just like the U.S.

Good investing,

David Fessler

Source: http://www.investmentu.com/2013/October/how-to-profit-from-putins-dividend-plan.html

http://www.investmentu.com

Copyright © 1999 - 2013 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules