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.
Source: Market Oracle
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