Dividend Yields 2022: Norsk Hydro Leads with 13.6% Net

Norsk Hydro and 13.6%: The Year Dividend Payers Kept People Fed

Can you live off dividends without owning a rental property or having an inheritance? In 2022, a year of declines in almost everything, a handful of listed companies paid double-digit returns to those who held their shares. Norwegian company Norsk Hydro finished as the big champion, with a net 13.61%, according to year-end tallies. In 2021, the same company barely offered a 2.53%. A gigantic leap, measured after taxes and expenses, not before.

The episode largely summarizes the thesis of the dividend investor: the stock market punished heavily, leaving target prices that previously seemed unattainable. The question, of course, is whether someone with less than 50,000 euros can build such a portfolio without ending up in the red.

Which Companies Truly Paid Out in 2022

The final podium combined high and modest returns, as a reasonable dividend strategy doesn't just chase big numbers. Some argue the target should be a net average of 4%, mixing companies yielding 7% with others yielding 2% that compensate when one cuts its payout. Only Norsk Hydro, Yara (9.33% gross), and Gaztransport Technigaz (3.17% gross, a 57% accumulated revaluation) cover three different profiles.

IBM closed the year with a 6.12% accumulated after distributing an annualized 4.74% in December, and Ambev announced a gross increase to 5.11% for 2023. The Brazilian brewer trades at a P/E of 18, a figure that discourages some and angers others. Glorious, describes it, is how those who hold it see it.

The 10% the Taxman Takes: The PTP Tax

At the end of 2022, a problem nobody had foreseen emerged. The US tax authority began collecting a 10% tax on all sales of PTP (Publicly Traded Partnership) interests, applicable from January 1, 2023, and not deductible afterward. It doesn't tax the profit; it taxes the total transaction amount. It affects names like Brookfield Infrastructure (BIP), Enterprise Products (EPD), AB, or Lazard.

The practical response was simple: many brokers recommended closing positions before year-end. An investor holding BIP faced selling at a loss or accepting the hit. Some argue that for stocks with little upside potential, the tax advantage forces a move; others see it as another reason never to sell certain holdings.

IAG, Boeing, and the Art of Buying Debt with a Moat

One of the most repeated analyses of the year was on IAG. The airline carried debt close to 20 billion euros and, in its best year in five, barely made 2 billion in profit. Ten clean years, in the most optimistic scenario, just to balance the books. The conclusion was unequivocal: sell.

Boeing is the exception that proves the rule. +40% for those who bought after the crash. A business with an almost unbeatable defensive moat and a direct link to the US government. You can have a lot of debt and still be attractive if the moat is deep enough. BASF, facing a similar issue, also entered portfolios with the hope of buying at a lower price.

Intel, ARM, and RISC-V: The Battle Nobody's Watching

The decline of German stocks was the common thread of the summer: BASF -30%, E.ON -30%, SAP -25%, Intel -32% year-on-year. Reductions that some prefer not to see and others celebrate openly. Against Intel, the debate peine about architecture: X86 ceasing to be king, ARM gaining ground in laptops, RISC-V waiting in the wings. Three irreconcilable positions on the same manufacturer.

When Dividends Become a Fiscal Punishment

The new Solidarity Tax on Large Fortunes introduced a paradox few anticipated. Those affected fortunes wishing to benefit from the 60% income limit have a perverse incentive: minimize the personal income tax (IRPF) base, which in practice means earning little or nothing from dividends. The strategy that sustains some becomes a fiscal burden for others.

Meanwhile, Apple remained the thermometer of the macroeconomic disaster. With the stock above 118, the question wasn't whether to buy, but at what price. References pointed lower, to the 80s. One of the top five S&P 500 companies, this analysis suggests, pulls index funds, pension plans, and insurers along: if the macroeconomy breaks, it falls on its own.

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At the end of the year, the balance was honest: the goal of doubling 2021 dividends was not met. In exchange, the portfolio held up better than the market. Not bad either, for a year when almost everyone lost money. The difficult part wasn't making money: it was not selling.