Stock Dubai Stock market DFM
Banking and real estate have traditionally offered the highest dividend payouts. Real estate companies might take some timeout given the market circumstances. Image Credit: Ahmed Ramzan/Gulf News

The Abu Dhabi utility company TAQA recently became the first listed UAE entity to confirm quarterly dividends.

In this context, it would be interesting to look at the dividends paid by DFM and ADX listed companies. Consistent payment of dividends is proof of financial strength, and of course, we can say that the concerned management is shareholder-friendly.

For income seeking investors, stable dividends are an important tool for financial diversification. And UAE stocks are solid from a dividend perspective due to the absence of dividend distribution tax as well as on personal income.

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Generous with their gains

An analysis of aggregate dividends of listed companies during the period from 2010 to 2019 gives us insights about the sectoral and individual dividend champions of UAE. In 2019, total dividends paid by listed companies rose to Dh39.94 billion from Dh11.90 billion in 2010, an increase of 235 per cent and which is remarkable.

In 2019, the largest dividend-paying sector was banking, which paid Dh18.19 billion, followed by telecom with Dh10.11 billion. Real estate companies parted with Dh6.67 billion, while oil and gas gave Dh2.03 billion to shareholders.

Property shines

From 2010 to 2019, the sector that showed the fastest dividend growth was in real estate. From Dh228 million, it grew to Dh6.67 billion in 2019, which is almost 29 times the 2010 level.

This is quite surprising considering the crisis the sector had experienced in most of those years. Nevertheless, it points to the dividend payment potential of the sector once the situation normalises.

Banks step into breach

Banking grew its dividend by 432 per cent from Dh3.41 billion to Dh18.19 billion. This too is quite remarkable, and these seem sustainable, given the ongoing consolidation among various banks and the headway made by technology in these years.

Consolidation has avoided duplicity of costs while technology has improved productivity as well as reduced personnel cost.

Mobile telecommunications, on the other hand, had stable growth and dividend growth was 125 per cent - from Dh4.49 billion to Dh10.11 billion.

Investor favourites

The Top 10 dividend-paying companies from an aggregate perspective during the ten years are Emirates Telecom Group (Dh69.73 billion), First Abu Dhabi Bank (Dh31.09 billion), Emaar Properties (22.37 billion), Emirates NBD (Dh16.93 billion), Abu Dhabi Commercial Bank (Dh15.23 billion), Dubai Islamic Bank (Dh13.12 billion), Emirates Integrated Telecom (Dh12.66 billion), Emaar Malls (Dh8.76 billion), Emaar Development (Dh7.26 billion) and Abu Dhabi Islamic Bank (Dh6.52 billion).

Others outside this list are ADNOC Distribution, Aramex and Aldar Properties, which have provided stable dividend gains. ADNOC Distribution benefits from being in a mature industry, while Aramex is a vital cog in e-commerce.

It is clear from the above list that banking majors are among the most stable dividend payers of UAE. FAB, in particular, is remarkable with the bank growing aggregate dividends from Dh217 million to Dh7.84 billion during the period.

UAE income investors would be well of with large banks and companies like ADNOC and Aramex.

- Vijay Valecha is Chief Investment Officer at Century Financial.