Stock - DFM
Dubai's DFM is having a good time of it this year, with post-IPO stocks turning in higher numbers. And DFM continues to widen its investor base. Image Credit: Bloomberg

Dubai: UAE stock market investors had a good April. Not just that, these investors are having a brilliant year-to-date, with many of last year’s IPO entities paying their first dividends last month – and just as important continuing to keep their stock prices high enough.

There was also the return by the master-developer Emaar to issuing dividends after a 2-year gap. It sure has been a season of giving, and where shareholders are concerned, for taking.

Check these numbers out – DEWA is up 8.73 per cent year-to-date, while Emaar Properties’ stock zoomed to 19 per cent (and its other entity Emaar Development by 26 per cent). The mortgage entity Amlak’s stock is up by a weighty 30 per cent, as investors zero in on a possible turnaround for the company that has sizeable accumulated losses to deal with.

There’s also been a comeback for Tecom on its stock price, which is up 11 per cent year-to-date.

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On ADX, it’s energy driving the performance, which was to be expected. Newly-listed ADNOC Gas is holding on to a 44 per cent gain, while ADNOC Drilling put on 26 per cent so far this year. Fertiglobe is in the positive territory with 11 per cent.

And then there is Salik, with the toll operator Salik’s stock up 50 per cent since its listing last year - and with a dividend yield of 7 per cent.

April payments’ boost

Last month, shareholders in some of the recent IPOs got what they paid for - Salik deposited Dh491 million for its 2022 second-half performance (at 6.55 fils a share).

DEWA paid Dh4.77 billion for H2-22, thus totalling Dh9.9 billion, including the special dividend for Empower. The Empower dividend for H2-22 was Dh425 million or 4.3 fils per share, translating into a yield of over 5.2 per cent.

The ADNOC joint venture Fertiglobe handed out $700 million in April against its H2-23 numbers, or Dh1.45 billion for the year (at 60 fils a share). This works out to a dividend yield of 18 per cent.

While Fertiglobe might be the outlier, ‘Regarding dividends, we have seen a steady increase from the typical 4-5 per cent range to, in many cases, now at more than 7 per cent,’ said Sameer Lakhani, Managing Director at Global Capital Partners.

“Emaar and Emaar Development dividends indicate not only the health of the Dubai/UAE real estate markets but also the returns investors are earning with exposures not only to the sector but also to the performance of the group.

“What is more encouraging is the performance of companies like Salik , ADNOC Gas, Al Ansari and Amlak suggest an increasing appetite for companies generating strong cash flows as well as those in turnaround.”

UAE recent IPOs and their year-to-date stock gains

  1. Empower is up 21%
  2. Salik has gained 18% (and 50% since IPO)
  3. Tecom is up 11% (Dubai's commercial real estate developer and landlord turned in a neat set of Q1-23 numbers.)
  4. Adnoc Gas lifted 44%
  5. Adnoc Drilling pulled out 26%

How much did dividends total in 2022?

Dividends for 2022 ‘noticeably increased from Dh42.7 billion in 2021 to Dh52.1 billion for 2022’ by UAE listed companies. “The increase reflects a combination of factors including new listings as well as higher payouts vs. last year,” said Junaid Ansari, Director of Investment Strategy & Research at Kamco Invest.

In the year-to-date, the DFM has been the second best performing regional market (up 6.7 per cent) after Saudi Tadawul (higher by 8.7 per cent), according to Kamco Invest. At DFM, the strategy of Dubai government owned companies hitting the market at regular intervals in 2022 has resulted in adding greater liquidity – and bringing new retail investors into the fold.

DFM brought in 167,332 new investors through 2022, and many with a direct link to the subscriptions they may have opened for the DEWA, Salik or Tecom IPOs.

Now, investors are readying for the announcement from UAE’s latest IPO – from ADNOC Logistics & Services – on the offer price and for subscriptions to open Tuesday. The broader ADX index is down 5.6 per cent year-to-date, and which is where the new IPO could deliver a timely lift.

Best-performing sectors

“In terms of year-to-date returns, the real estate index has been the best performing on DFM, and the third best-performing sub-index on ADX,” said Ansari. “Consumer discretionary and consumer staples have been the best performing on ADX.

“In terms of decliners, the industrial and healthcare indices on ADX had double-digit declines.”