Highest Dividend Yields in SMI Stocks 2018

Top Five Dividend Stocks in the SMI


Little has changed since 2017 regarding the top five Dividend Stocks. Credit Suisse (now ranked 18th) has been replaced by Adecco and the ranking in third to fifth place has changed slightly.

2018

  1. Zurich 5.72%
  2. Swiss Re 5.31%
  3. Swisscom 4.87%
  4. UBS 4.06%
  5. Adecco 3.95%

2017

  1. Zurich 5.67%
  2. Swiss Re5.22%
  3. Credit Suisse 4.41%
  4. Swisscom 4.35%
  5. UBS 3.83%

It was to be expected that the high dividend payment by Credit Suisse would not be sustainable. In 2018, Credit Suisse's dividend yield amounts to approximately 1.59%. This is a good example of not being blinded by high dividend yields. It is much more important to pay attention to whether a company can generate the necessary profits in order to create long-term added value for its shareholders.

 

Disclaimer

As I wrote in my earlier post "How to make money with stocks", you should do your own homework before every investment. Alternatively, this can be delegated to an expert. My analysis should not be understood as a recommendation to buy, sell or hold a stock.

List of SMI Dividend Yields 2018


Yield Company Price* Dividend* Earnings* Payout Ratio
5.72% Zurich

314.90

18.00

19.59

91.88%
5.31% Swiss Re 94.22 5.00 1.01 495.05%
4.87% Swisscom 452.00 22.00 30.31 72.58%
4.06% UBS 16.00 0.65 0.27 240.74%
3.95% Adecco

63.36

2.50 4.65 53.76%
3.77% Swiss Life 358.40 13.50 29.65 45.53%
3.76% LafargeHolcim 53.24 2.00 -2.78 n/a
3.70% Roche 224.55 8.30 10.04 82.67%
3.64% Novartis 77.00 2.80 3.20 87.50%
3.20% ABB 24.34 0.78 1.01 77.23%
3.05% Nestlé 77.10 2.35 2.32 101.29%
2.93% SGS 2559.00 75.00 82.22 91.22%
2.56% Givaudan 2270.00 58.00 77.54 74.80%
2.35% Geberit 443.10 10.40 14.31 72.68%
2.25% Julius Baer 62.30 1.40 3.25 43.08%
1.92% Richemont 93.80 1.80 2.32 77.59%
1.54% Swatch 485.60 7.50 13.84 54.19%
1.50% Credit Suisse 16.65 0.25 -0.41 n/a%
1.37% Sika 8080.00 111.00 253.52 43.78%
1.03% Lonza 267.00 2.75 10.60 25.94%

*in CHF per registered share, bearer share or profit participation certificate as at 18.05.2018

Strikingly High Payout Ratios


It is striking that three of the top five have a payout ratio of more than 90%. This is due to Zurich Insurance Group's dividend policy. In order to keep the return on equity high, hardly any profits are retained. I wrote about this in detail last year: Stocks with the highest dividend yields in the SMI

 

Swiss Re and UBS, on the other hand, had to deal with special one-off effects. A historically exceptionally high amount of losses due to the hurricane season, forest fires in California and earthquakes in Mexico had a major impact on Swiss Re's income statement. Thanks to its high capital reserves, Swiss Re is still well positioned and was able to increase the dividend by 3.1% from CHF 4.85 to CHF 5.00 per share compared to 2017. 

 

UBS's past record of heavy losses resulted in an exceptional write-down of approximately CHF 3 billion in 2017 as the US reduced its corporate taxes. Losses usually can be offset against future profits. However, profits in the USA will now be taxed at 21% instead of 35% as of 1.1. 2018. Simply put, this means that each USD loss carryforward is "worth" 0.14 USD less, as the deduction is 14% in taxes.

Conclusion


Would you like to benefit from high dividend yields and put together an individual dividend portfolio? Be sure to carefully select the companies and analyze their fundamentals. This way you avoid unpleasant surprises in the future and can continue to benefit from high profits.

 

As an independent financial advisor and asset manager with many years of experience, I am happy to take the time for your individual questions and concerns. If you are interested in a topic, simply send me a short e-mail or contact me directly using the button below. I will answer your questions promptly and personally.

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