Supporting the market’s continued rally were the sizable dividends announced by two of the top three banks in the market, with Mansour Bank (BMNS)’s announcement in March of a cash dividend amounting to a 4.7% dividend yield, and a 31.5% share dividend, for an effective dividend yield of 19.5%. This was followed, in April, by the National Bank of Iraq (BNOI)’s announcement of a cash dividend amounting to a 4.9% dividend yield, and a 25.0% share dividend, for an effective dividend yield of 9.5%.
The returns of these oversized dividends were further boosted by a couple of peculiarities of the securities’ regulation, and of the stock market action before and after a stock dividend issuance. The first of which is that the dividend stock’s price is always issued at nominal value, i.e. Iraqi dinar (IQD) 1.0, irrespective of the stock’s market price. While the second is that stock prices don’t always immediately adjust fully for the effects of a stock dividend, or for that matter for cash dividends, in other words, stock prices on the ex-dividend days don’t always decline proportionally to compensate for the dividend’s issuance. In the case of a company’s positive earnings momentum, especially when its stock’s market price is above IQD 1.0, market participants strongly bid up the stock up to the AGM, and tend to sell immediately on the ex-dividend day, and on subsequent days, to benefit from such a peculiarity, which tends to take stock prices towards the theoretically dividend-adjusted stock price. In the case of both BMNS and BNOI, their stock market prices, for the most part, followed such a script. However, their prices quickly recovered, with BMNS ending March up 4.7% above the theoretically dividend-adjusted price, that was followed by another 8.0% increase in April, for a cumulative 11.8% positive return. While BNOI ended April 5.2% higher than the theoretically dividend-adjusted price –both cases are an indication of the underlying health of the market.
Not wishing to miss out, the Bank of Baghdad (BBOB) declared a cash dividend amounting to a 12.1% dividend yield, in their just concluded AGM on 3rd May. These dividends promise a repeat of last year’s humongous dividends by the other top companies in the market, such as Asiacell Communications (TASC), and Baghdad Soft Drinks (IBSD).
The icing on the cake, for these dividends, and the market’s positive action, is the unusually mild weather in the country this time of the year. Baghdad’s weather in late afternoons was mild, with many cool nights, some of which were punctured by lightning, and thunder followed by heavy rains –with forecasts of more to come in the next few days. The cooler weather made walkabouts extremely pleasant in Baghdad, the city that is full of life and that never sleeps –as experienced the last few days at 1 am in trying to secure a table in a popular grill house in Yarmouk’s lively Four-Streets, at the end of a long walkabout that started late afternoon (pictures below).
| 
