The Swiss exception

Swiss companies differed from their European neighbours in 2020 with their generous dividends.

Bertrand Beauté

The only country in Europe where shareholder dividends remained stable from 2019 to 2020, “Switzerland was the hero of dividends in Europe,” wrote the authors of the Janus Henderson Global Dividend Index. Why was Switzerland the exception? “Swiss companies are financially healthy,” said Jérôme Schupp, analyst at Prime Partners. “Very few had to reduce their dividends to survive the crisis.” Eleanor Taylor Jolidon agrees: “Dividend pay-outs are quite simply a reflection of the quality of Swiss companies,” said the co-head of Swiss & Global Equity Portfolio Management at Union Bancaire Privée (UBP). Of the 20 companies on the Swiss Market Index (SMI), the benchmark index for the Swiss markets, only three – Swatch, Alcon and Richemont – decided to reduce dividend pay-outs to shareholders.

Of the 214 companies on the Swiss Performance Index (SPI), only one-tenth decided to eliminate dividends. Among them are hearing prosthetics manufacturer Sonova, media group TX Group (formerly Tamedia), luxury hotel and clinic specialist Aevis Victoria, logistics specialist Kühne+Nagel, duty-free shop group Dufry, kiosk operator Valora and outdoor advert agency APG/SGA. While that list may seem long, it’s actually a lot shorter than in other European countries, where approximately one-fourth of companies listed on the Euro Stoxx index did not pay dividends for the 2019 financial year.


Credit Suisse and UBS were able to pay the entire expected dividends to shareholders


In addition to the quality of Swiss companies, there are other factors that explain Swiss resilience, such as authorities that were less coercive than those in Europe, particularly towards the banking industry. Credit Suisse and UBS were able to pay the entire expected dividends to shareholders, whereas the majority of European banks were unable to do so. 

Another notable difference between Switzerland and its European neighbours: the Swiss market, particularly the SMI, does not include many companies that are active in industries that were hardest hit by the pandemic: “Giants such as the airline Lufthansa, which received millions from the German government to survive, do not legally have the right to pay dividends due to the aid received,” said Schupp. “That’s also the case here; companies receiving COVID loans guaranteed by the Swiss government are not authorised to pay shareholders until the loans are paid back in full. But in Switzerland, that primarily applies to private companies that aren’t publicly listed, not giants like IAG (owner of British Airways) or Air France, in terms of airlines.”