Published Thu, 11 Jul 2019 16:44:39 -0400 on Seeking Alpha
As those of you following my articles may know, I don't own certain banks - namely Nordea AB (OTCPK: NRBAY) directly, but instead, own them through investment companies like Sampo (OTCPK: SAXPF). My portfolio allocation to Sampo is large, coming in at ~3%. This is something I'm very happy with because Sampo comes with not just banks but some of Scandinavia's leading insurance businesses across the Nordics and Baltics. You can read more about my thoughts on Sampo as an investment in my article entitled Sampo: State-Owned Dividends From Scandinavia, where I present the company from bow to stern.
Recently, the company announced the upcoming potential payout of a special dividend. This is not atypical for Scandinavian companies. Several of them, instead of providing static, high dividend growth rates, give the investor smaller dividend growth but compensate during lucrative times through the use of special dividends.
Let's take a look at what the case is here and also do a small thesis update.
Sampo - Special dividend and recent performance
So, Sampo isn't distributing an extra dividend because of strong recent performance. The reason for the payout is instead the group's target to reduce Nordea ownership to below 20% (from a current 21.2%), resulting in a change in the solvency calculation with regards to Sampo, then falling to a new solvency directive. (Solvency II). From the press release:
As a result of the distribution of the share dividend, Sampo's... Read more
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