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(Bloomberg) — Polish stocks are set to be Europe’s best performers in the first quarter, with a big boost in dividends keeping investors engaged even as expectations for a quick peace deal in neighboring Ukraine fizzle.
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Warsaw’s benchmark WIG20 index has gained 23% this quarter — more than twice as much as Europe’s buoyant Stoxx 600 gauge. Energy firm Orlen SA has jumped 43% this year after increasing dividends due to improved profitability of its upstream, refining and gas segments. Banks are also offering higher payouts amid continued tight monetary policy.
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Warsaw stocks have nearly doubled their dividend yield over the last two years, exceeding levels seen in both the Stoxx 600 and the MSCI emerging-market index. The Polish market had rallied sharply in the first weeks of 2025 on optimism that US President Donald Trump would quickly stop the war in Ukraine, which is proving more difficult to achieve.
“A large number of investors were not interested in relatively cheap Polish companies because of the low payouts,” said Piotr Salata, a fund manager at mutual fund Pekao TFI SA. “Now we have one of the highest dividend yields in the region, and it was noticed.”
Payouts to minority shareholders are expected to reach 20 billion zloty ($5.2 billion) this year, according to Pekao TFI estimates, almost twice as much as in 2024.
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Polish lenders are expected to pay about half of their record profits to shareholders, according to the Polish bank association, as costs associated with Covid-era safety mechanisms and Swiss-franc loan disputes decline. PKO Bank Polski SA, the country’s biggest lender, said it is planning to offer 75% of last year’s net profit as dividends, which compares to 66.5% payouts from a lower profit in 2024. PKO didn’t pay dividends in 2023.
Bigger dividends are also helping to revive public offerings, with CCC SA raising fresh capital, while those of Zabka Group SA and Diagnostyka SA enabled their owners to sell stakes.
Nevertheless, the market remains sensitive to setbacks in US-led efforts to build a lasting peace in Ukraine as well as potential Polish initiatives to slap windfall taxes on the banking industry, which have been mentioned by junior coalition partners but so far rejected by the government.
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