Investors who love coupons should mark this date in their calendar: May 20th. This is precisely the day on which most of the companies on the main stock exchange on Piazza Affari, the FTSE Mib, detach their dividend.
Based on the Borsa Italiana calendar, there will be around twenty Italian blue chips that will detach the coupon on May 20th and which – usually – will pay in the following two days. In this regard, it is good to remember that these are dividends relating to the 2023 financial statements.
The dividends of Italian banks
Among these there are numerous banks (click here to learn more), including Intesa Sanpaolo (ISP), which has almost doubled its dividend compared to 2022, and Monte dei Paschi di Siena (BMPS), which has returned to profit and coupon almost two years ahead of the plan target.
Furthermore, for the first time, Mediobanca (MB) has introduced an advance dividend in May from 2024, equal to 0.51 euros per share for a value of 421 million. The decision is in line with the provisions of the 2023-2026 Strategic Plan. The balance will be in November.
Two other credit institutions that have been at the center of rumors on banking risk in recent months, namely BPER (BPE) and Popolare di Sondrio (BPSO), will also pay the dividend on May 20th. On the same day, it will be the turn of some managed savings stocks, including Azimut (AZM) and Finecobank (FBK), and the insurance companies Generali (G) and Unipol (UNI).
The other FTSE Mib stocks protagonists of D-Day
Investors in the luxury sector, who are going through a truly challenging period on the stock market, can count on the ex-dividend of Brunello Cucinelli (BC) and Moncler (MONC) on May 20th.
In the energy sector, ENI (ENI) will distribute the fourth tranche of its dividend on May 20th and Tenaris (TEN) will also be there on the same date. In the utilities sector, however, A2A (A2A), ERG (ERG) and Italgas (IG) are worth mentioning. Amplifon (AMP) and Recordati (both in the health sector), INWIT (INW infrastructure) and Interpump (IP industrial sector) will also participate in the coupon D-Day.
What are dividends and how they work
To help investors prepare for May 20th, let’s remember what coupons are and how they work.
Dividends are the portion of profit that a company distributes to its shareholders at the end of the financial year. A company does not always pay a dividend, even if it is profitable, because it can decide to use the money for other purposes such as new investments or to pay off debts or to strengthen itself from a capital point of view. The proposal for the distribution of the dividend is formulated by the board of directors and approved by the shareholders’ meeting.
Some examples of companies that will not detach the dividend this year are Telecom Italia (TIT), which did not do so for the years 2022 and 2021 either, and Nexi (NEXI), which presented its quarterly report on May 9th, announcing a plan of 500 million buyback by the end of October next year.
The amount of the dividend depends on the number of shares each investor owns. Usually, in fact, it is said that the company distributes x euros per share. For example, if the coupon is one euro and you own ten shares, the total will be 10 euros. Generally, the dividend is paid in cash, but it may happen that it is paid in securities, as in the case of Azimut on May 20th.
Dividends are taxed at a rate of 26%, like other financial income, except government bonds (12.5%). The withholding tax is at source, so individuals do not have to report anything on their tax returns.
What happens to stocks on the stock market on dividend ex-dividend day?
On May 20th, as well as on other ex-dividend days, investors should expect a decline in share prices. In fact, the share price is reduced by a portion corresponding to the value of the dividends. Anyone who purchases the stock on the ex-dividend date will therefore not see the dividend reflected in it. In other words, he will not take the coupon.
The situation is generally the opposite when a company announces a higher-than-expected dividend, because the stock tends to rise. Investors read this news as an indicator of the company’s good health and positive outlook. Although they must keep in mind that high dividends are not always synonymous with a healthy company, because there may be low-quality companies with coupons that are not sustainable over time. In these cases we speak of a dividend trap.
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