Shares of Romanian state-owned energy companies surge on high dividend expectations

The shares of Romanian state-controlled energy companies have recorded significant gains on the Bucharest Stock Exchange in the last week due to strong profits recorded in 2022 and a Government decision forcing them to pay 90% of the earnings to investors as dividends.

The BET-NG index, which follows the top Romanian listed energy companies has gained 3.3% in the last week (as of Friday, March 3), compared with a 0.5% increase for the BVB’s flagship index – BET.

The shares of power grid operator Transelectrica (TEL), lead the pack with a 13% increase in the last week, fueled by the strong net profit reported for 2022 – RON 529 mln (EUR 108 mln), up from only RON 0.45 mln in 2021.

Electricity producer Nuclearelectrica (SNN) and electricity distributor Electrica (EL) also saw their shares rise by over 5% in the last week. Gas producer Romgaz (SNG) and gas transporter Transgaz (TGN) recorded gains of over 3%.

These evolutions are largely linked with a Government decision on March 1 that obliges the companies controlled by the state to distribute at least 90% of their net profits for 2022 as dividends. Through this measure, the Government estimates it will cash in dividends worth RON 9.7 bln (almost EUR 2 bln) from the companies it controls, the biggest part of the money coming from energy companies such as soon-to-be-listed Hidroelectrica and those already listed on the Bucharest Stock Exchange.

However, this is also good news for the investors who own shares in these companies, as they will get significant dividend yields. The estimated dividend yield at Transelectrica is close to 24%, while in the cases of Nuclearelectrica and Romgaz the expected yields are around 15%, considering the current trading prices.

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