M.he are more than 800,000, the holders of public cooperative shares. The latter cannot be compared with listed shares. An important difference is that in principle the value of cooperative shares does not change. The nominal value remains the same, so there is no prospect of potential added value.
There are also major differences in terms of liquidity. You cannot immediately sell cooperative shares. Typically, you must declare your sale during the first half of the fiscal year to receive the repayment of the shares a year later. Furthermore, the amount with which you can invest in a cooperative share is often limited. Usually it concerns a maximum of several thousand euros.
Although these differences seem to be at a disadvantage, the cooperative stocks offer an important advantage. Because they focus on the long-term relationship with the cooperative, the cooperatives aim for a stable and attractive dividend over the years, regardless of the economic cycles. Dividend returns of 3 percent and more are no exception. For that reason, the shares were often seen as glorified savings accounts, but the bankruptcies of Arco and Groenkracht have shown that they remain shares with risk.
Yet most cooperative stocks also seem to be a beacon of stability in times of corona crisis. Most will maintain their high dividends in 2020. We distinguish three groups.
Banks
Cera recently paid out a gross dividend of 3.25 percent. That is slightly higher than the 3 percent paid out in 2019. “Cera’s income comes almost exclusively from the dividends from KBC and KBC Ancora, but you should not see this one on one,” says CEO Franky Depickere. ‘It’s not because KBC and KBC Ancora are scrapping dividends that we are doing that. We have always pursued a prudent policy and built up reserves when things went well. We strive for continuity of our dividend. ‘
We have always pursued a prudent policy and built up reserves when things went well.
CrelanCo, the shareholder of Crelan, maintains its dividend at 3 percent, although it is still a bit of a blow. Due to the Covid-19 situation, the dividend will be paid in October at the earliest. On condition of a positive liquidity and net asset test at that time, ”it reads. Just like with Cera, the shares of CrelanCo are accessible to everyone. The maximum per shareholder was increased last year by 1,000 euros to 5,009.60 euros (404 shares), in order to co-finance the acquisition of AXA Bank Belgium by Crelan.
We still have to wait a while for the dividend from Argen-co, the cooperative above Argenta. The financial year ends on June 30, so that a decision will not be made on the dividend to be paid in 2020 until October. Last year the cooperative paid a dividend of 3.1 percent. Argen-co had plans for a new issue, but they were postponed to the end of this year or next year due to the corona crisis.
Microfinance
While the income streams of banking cooperatives depend on the dividends of the underlying bank, microfinance cooperatives have much more diversification of income. These organizations provide loans to small banks in developing countries, which in turn provide microcredits to start-up entrepreneurs. The bulk of the income is therefore interest income, supplemented with dividends or capital gains by entering the capital of the financial institutions.
Oikocredit Belgium finances more than 700 institutions. ‘As a result, we support millions of people in developing countries,’ says director Johan Elsen. Incofin and Alterfin also support sustainable projects in developing countries. ‘We work with 180 organizations in 38 countries, both in microfinance and sustainable agriculture. In this way we support 3.7 million vulnerable families, ‘says Alessandra De Paep of Alterfin. Even more than a financial return, these cooperatives aim for a social return.
‘We work with 180 organizations in 38 countries, both in microfinance and sustainable agriculture. In this way we support 3.7 million vulnerable families. ‘
The dividends from Alterfin and co. or lower than those of the banking cooperatives, these shares provide an additional tax benefit. For example, as a partner, you will receive, under certain conditions, a limited tax reduction on the amount invested. There is also a degressive withholding tax.
Alternative energy
The highest dividends can be found in the alternative energy sector, where Wase Wind paid a dividend of 5.5 percent last year. But these cooperatives often have the greatest conditions. The shares are often reserved for those who become a customer of the energy supplier. Moreover, the trip is more strictly regulated. At Ecopower, you as a cooperative are tied up in the capital for six years.
A point of attention for energy cooperatives is the destination of the capital. Sometimes as a partner you are the owner of production installations, such as with Ecopower, sometimes your money is used to grant subordinated loans, such as with Limburg Wind, Wase Wind and Aspiravi.