Bimbo to Lala Rush Dividends Before Mexico Capital Gains TaxJonathan Levin and Ben Bain
Mexican stock dividends are poised to rise to a four-year high as companies rush to return cash to investors before a new tax goes into effect next year.
Payouts from companies on the benchmark IPC index are set to climb 55 percent from a year ago to at least 19.4 billion pesos ($1.5 billion) in the fourth quarter, the highest since the last three months of 2009, according to data compiled by Bloomberg. The figure includes planned dividends not yet paid.
“We’re calling it the dividend fiesta,” Marisol Huerta Mondragon, an analyst at Grupo Financiero Banorte SAB, said in a telephone interview from Mexico City. “The extraordinary distributions companies are making now are aimed at helping shareholders avoid this 10 percent tax on dividends.”
A bill approved this year will impose the tax on payouts to shareholders and capital gains, in addition to creating levies on soda and junk food and increasing the maximum income tax. It’s part of a government effort to bring in revenue from a broader range of sources with the goal of cutting the tax burden on Petroleos Mexicanos, the state-owned oil producer.
Grupo Lala SAB, the $5 billion milk company that went public last month, is proposing to pay a dividend in 2013 that was previously planned for February. Grupo Bimbo SAB shareholders approved a 0.35 centavo per share dividend payable next month, its first fourth-quarter dividend since 2006.
Antonio Zamora, chief financial officer of Lala, said the company wanted to return money to investors to help them meet their cash requirements. Lala began as a farmers’ cooperative, and many of its owners operate dairy farms.
“There’s no fiscal benefit for Lala as a company,” Zamora wrote in an e-mailed response to questions. “Paying a dividend allows them to accelerate their investments and at the same time it will eventually bring future benefits to the company in terms of productivity.” He declined to comment specifically on the tax reform.
Monica Breton, a press official for Bimbo, didn’t immediately respond to a phone call and e-mail seeking comment on the company’s dividend policy.
“Everyone is proposing dividends precisely to reward stockholders,” Aldo Miranda, a trader at Intercam Casa de Bolsa SA, said in a telephone interview from Mexico City. “It’s very clear.”
Mexico’s benchmark stock index rose 2.1 percent today, trimming losses to 4.2 percent this year.
Mexican stocks have slumped with other emerging-market equities in 2013 amid mounting concern speculation the U.S. Federal Reserve will reduce record stimulus. Coca-Cola Femsa SAB, the world’s biggest franchised Coke bottler, has retreated 21 percent before the implementation of the new taxes.
The nation’s economy has also slowed. The Finance Ministry this month cut its forecast for 2013 gross domestic product growth to 1.3 percent from a previous 1.7 percent. GDP expanded 3.9 percent last year.