High dividend-yielding Norwegian shares

 

Foreign investors can benefit from investing in Norwegian companies traded on Oslo stock exchange. Norway has a strong economy and a stable democracy.  It is also a nation that does well economically in periods of rising commodity prices due to its production of oil and gas.

Table 1 shows an overview of the highest dividend-yielding Norwegian shares. The majority of the country’s high-dividend companies are controlled by billionaire John Frediksen. These include Golden Ocean, Seadrill and Marine Harvest, all with dividend yields of 10% or more.

Golden Ocean is a dry bulk shipping company. The shipping market has been hit hard by the global economic downturn, with freight rates in the dry bulk market dropping more than 65% from a May 2008 peak. Although the Baltic dry bulk index has strengthened since it bottomed in early January 2011 and despite a sharp fall in freight rates, Golden Ocean has managed to pay a healthy dividend yield. The firm estimates a contract coverage of 86% for 2011, 78% for 2012 and 69% for 2013.

Seadrill is an offshore deepwater drilling company. Global rig rates are expected to increase on the back of a stronger oil price, which will benefit Seadrill.

Marine Harvest is a seafood company and a large producer of farmed salmon. The global demand for seafood is expected to be strong and thus supportive of higher prices. Marine Harvest is expected to pay a dividend yield above 10%; its last dividend yield in 2010 was close to 15%. Its stock price also has large upside potential from its current price level.

 

share

yield

Golden Ocean

14.87%

Seadrill

9.94%

Marine Harvest

9.87%

Gjensidige Forsikring

7.50%

Orkla

4.44%

Prosafe

4.37%

Fred Olsen Energy

4.31%

Statoil

4.05%

 

Table 1. Norwegian firms yielding high dividends in 2011

Gjensidige Forsikring is a financial services company. It offers insurance (main business), online banking, loans and savings. It has more than 190 years of operating history including a strong brand and customer awareness. It currently has a 27% share of the Norwegian insurance market.

Orkla is a conglomerate, concentrating in the consumer goods, aluminium solutions, materials, renewable energy and financial investment sectors. It has historically paid a relatively high dividend yield.

Prosafe is a leading owner and operator of semi-submersible accommodation/service rigs. The company’s services are in demand due to a high oil price which supports increased oil exploration.

Fred Olsen Energy provides exploration and production services to the offshore oil and gas industry. It does well in periods of higher oil and gas prices.

Statoil is an international energy company with over 35 years of experience on the Norwegian continental shelf. Statoil has historically paid a relatively high dividend yield and the share price has potential upside with higher oil and gas prices.