Stock - DFM / Dubai Financial Markets
There is a lot going on in the UAE stock markets as IPOs light up on investors' radar. Plus, of course, there are the juicy dividends too. Image Credit: Bloomberg

Dubai: In a few weeks, the first of the dividends will be reaching the bank accounts of UAE stock market investors, covering everything from the DEWA payout of Dh3.1 billion (at Dh6.2 fils a share) to that from Dubai Taxi Co., which will issue its first shareholder payment totaling Dh71 million in April.

The Dh71 million from DTC represents the dividend for Q4-2023 and thereafter the Dubai company will be handing out up to 85 per cent of its annual profits to investors.

They aren’t the only ones who will be issuing dividends – and mighty solid ones too - for their 2023 performances. And there should be plenty more in store for investors this year.

The bottom-line? Dividend payouts and - fingers crossed - individual performances by stocks on the DFM and ADX should give what investors want.

The increased emphasis on dividend pay is what will continue to distinguish UAE stocks in 2024.

- Sameer Lakhani of Global Capital Partners

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“The increased emphasis on dividend pay is what will continue to distinguish UAE stocks in 2024,” said Sameer Lakhani, Managing Director at Global Capital Partners. “In 2024, stock price growth and dividend plays will be on offer on DFM and ADX, with increasing options for investors. And with pension funds gearing up to offer their services to investors in the UAE.”

These stocks had the highest price run up in 2023:

  1. Gulf Navigation - up 430%
  2. ADNH - 193%
  3. RAK Properties - 72%

A year when UAE IPOs grabbed all attention

If 2022 was when IPOs from Dubai and Abu Dhabi companies started to emerge as viable options for a new generation of investors, in 2023, they were all plugged in. While just about every stock market float by a UAE company was instantly over-subscribed, nearly all of them had spectacular first day runs on their listing. For confirmation, just check out how Dubai Taxi and Abu Dhabi’s PureHealth did.

And each IPO seemed to bring in new investors to the fold. There were 57,000 new accounts registered on DFM in 2023, while overall traded volumes were up by 33 per cent year-on-year on ADX.

There are plenty coming

“We expect (another) 10 companies should come to market in the visible future,” said Amer Halawi, Head of Research at Al Ramz Corporation. “We also believe this government-initiated IPO momentum could very well feed through to the private sector - in due time and as the market matures.”

These UAE stocks generated the highest traded volumes:
IHC: Dh85.1b

Alpha Dhabi: Dh32.5b

Multiply Group: Dh23b

Emaar Properties: Dh22.7b

Emirates NBD: Dh11.5b

DIB: Dh7.1b

New UAE IPOs have been well over-subscribed, and the average weighted return of all IPOs since 2021 was +10% at end 2023. We anticipate future IPOs would continue to pay over-sized yields to attract investors.

- Amer Halawi of Al Ramz Corporation

Will ‘Parkin’ be next?

For now, all eyes will be on the newly created ‘Parkin PJSC’, an entity that was created last week by the Dubai Government bringing together all parking spaces in the emirate as its asset base. Each passing day raises the investor anticipation of when Parkin comes out with its own stock market float.

“Each of ADX and DFM have laid out a clear, quantifiable (market) cap target of Dh3 trillion for their respective stock markets, which ADX has already achieved,” said Halawi.

“Both markets are probably seeking the coveted ‘developed’ market tag. This is after having earned the status of ‘emerging’ market, and having observed the significant capital inflow benefit, from an index designation upgrade.”

Investors await LuLu and Spinneys

While investors ready for their first dividend pay-ins of the year (the majority of these being in April), two high-profile IPO launch dates should also be coming closer. These, obviously, are from LuLu and Spinneys, two established retail brands in the UAE.

There haven’t been that many retail sector specific listings in the UAE stock market. Sure, there had been that from Emaar Malls, but that should be seen as more a hive off by the parent entity Emaar Properties. (Emaar Malls was subsequently de-listed after its absorption into the Emaar Properties’ fold again.)

Americana, the Middle East’s biggest name in F&B, has done quite well for itself, with a 20 per cent plus gain in its share price. The ADX and Saudi Tadawul listed entity last 2022.

The LuLu IPO was initially planned for some time last year, but was then pushed back to 2024. Any which way one looks at it, LuLu should be a standout listing of the UAE.

“We know of 3 IPOs apart from Parkin - Spinneys, LuLu and (property listings portal) dubizzle,” said Lakhani. “In the first two cases, investors will be looking at valuations and dividend payout as is the industry norm.

“For dubizzle it’s more about the top-line growth and cross-platform monetization. Whichever way you look at it, whether dividends or growth, investors have multiple choices to build their portfolios in 2024 and reallocate to areas that trade at a discount to their peers in the Western markets.”

Some catching up to do for ADX

DFM closed 2023 with the market index up 21.7 per cent, and making it the best performing one in the GCC. ADX was down 6.2 per cent after a stellar 2022 – the index clawed its way back from a bigger drop in the final weeks of 2023.

“The ADX faced headwinds, recording its first annual loss since 2020 with a 6.2 per cent volume decline,” said Vijay Valecha, Chief Investment Officer at Century Financial.

“Weakness in real estate and utilities sub-sectors, along with fluctuating oil prices, contributed to the downturn. Also, ADX’s leading component First Abu Dhabi Bank witnessed an 18.4 per cent decline in its share price, marking the second consecutive year of setbacks for the largest lender by assets.”