Bankers from Sweden
10 % High Yield Investments # 2/3
Hello there,
This edition is the second part of three-part series on diversification on Nordic stock markets. On last edition we discussed about Finnish clean energy producer and electricity provider Fortum Inc. and took a closer look on electirical technical analysis. We also introduced a multi-zone analysis, which helps to optimize and personalize ideal buy zones.
You can check the last edition by here:
This time we shifting to a different sector in a different Nordic country (as you most likely have gathered already from the title, obviously).
Without spending further time on intro storytelling, let´s start delving to the topic!
Did you know that Sverige Riksbank - Central bank of Sweden, founded at 1668 - is the second oldest central bank in the world, preceeded only by a Napolian central bank?
Don´t worry, we are not starting a discussion on history of central banks - I think this edition would never be finished if we would. I just asked you the above question to emphasize that Sweden has strong roots in the banking and finance sector.
Introducing…
Svenska Handelsbanken AB
Svenska Handelsbanken AB or just Handelsbanken [“SHB-A”] is an internationally operating Swedish banking group founded at 1871. The bank operates in more than 20 countries around the world and employs more than 11,000 people.
Roughly 44% of total loans are tied to the Swedish real estate market. Outside of Sweden, the bank operates primarily in the U.K. and Netherlands. Handelsbanken generates about three fourths of its income through its interest spread-based business, including mortgages, household loans, and corporate loans to large and small enterprises. Handelsbanken has a large exposure on mortgage sector, and such exposure of course has its pros and cons.
Earnings and Payout ratio
2022 and 2023 have been strong years for banking sector in general, and naturally for Handelsbanken as well. SHB grew its earnings by 34 % from 10,95 to 14,71 SEK per share and total operating profit grew by 35 %.
12-month forward dividend yield is 10.76% with a 57 % payout ratio. Dividend has been strong in recent years and seems to be well covered for the future.
Investment
An investment of 1.500 euros for a 122 SEK stock price provides us 140 stocks. This investment grows the annual dividend income by 160 euros % with a + 10 % dividend yield. The payout schedule is annual.
The current price is 108 SEK and the investment was made around 122 SEK.
Yep, you heard right. The recent heavy price drop happened because the dividend was distributed and stock price has dropped a bit further than the amount of the distributed dividend.
And this is fine by us. The plan is to acquire more this stock during the upcoming years. As the company has been operating around 150 years already, it is likely, that the company will keep operating for years to come regardless of the market conditions and whether there are recessions or not.
Based on thinking through probabilities, this is a risk we are willing to take. A well calculated risk with an above medium risk-to-reward ratio.
Now, let’s take a look at technical analysis and on where we could find the next entry zones.
Technical Analysis
Weekly:
Daily:
The charts are clean and obvious. The zone for next buys is around 96 - 103 region.
That’s a wrap for today’s edition! Next time we a discussing more about trading-related topics.
Thank you for being here
Love the Nordic countries. Some extremely good investment opportunities there. People rely on the US far too much in my opinon.