Income generation remains the principal objective for the majority of Maltese retail investors. In fact, most retail investors nowadays have an overriding preference to invest in bonds – Malta Government Stocks and corporate bonds – which offer a fixed annual interest rate and the comfort of a defined redemption date.
In the past, however, many retail investors had also identified the role that dividend-yielding equities can play within a balanced portfolio by supplementing the investment income from their bond holdings while also offering the prospect of capital growth over time.
However, the dismal performance of the equity market since the onset of the COVID-19 pandemic in early 2020, together with the ageing demographics of retail investors focusing on equities listed on the Malta Stock Exchange (MSE), has materially altered the appetite of most retail investors towards shares.
Despite this, following the end of the annual earnings season, it is worth publishing the accompanying ‘dividend league table’ – a list of the top five equities on the MSE ranked by their net dividend yield attributable to the most recent full financial year – to identify which are the highest-yielding equities.
On the basis of the closing prices as at June 22, these five companies currently offer a net dividend yield in excess of 6%.
The dividends quoted throughout this article, and the net dividend yields derived from them, are stated net of tax at source. Under Malta’s full-imputation system, companies distribute dividends out of profits on which tax has already been deducted at the corporate level.
Retail investors whose personal marginal rate of tax is lower than the rate withheld at source may therefore be entitled to a refund once the dividend is declared in their annual tax return, depending entirely on their own circumstances. For such investors, the dividend actually received, and hence the effective yield, would be higher than the net figures presented here.
Malta’s top-yielding equities
HSBC Bank Malta plc tops the table with a net yield of 8.36%. The bank distributed a total net dividend of €0.1196 per share in respect of the 2025 financial year, which represents a dividend payout ratio of 60%.
HSBC Malta’s yield has been elevated in the past two years, and in fact, the distribution for 2025 was 16% lower than the previous year as pre-tax profit fell by 29% in 2025 amid a decline in the interest-rate environment.
As part of the agreement between the parent company of HSBC Malta and CrediaBank, quarterly dividends will be distributed to shareholders this year. In fact, a gross interim dividend of 3.6 cents per share (also representing a 60% payout) will be paid on June 30.
AX Real Estate plc occupies second position at 7.59%, having more than doubled its net dividend to €0.0372 per share for the 2024-25 financial year.
The company has a diversified property portfolio spanning hospitality, care homes, offices and residential assets. The large majority of rental income and profitability is generated from the hospitality division, which was boosted in the last financial year following the recent major extension to the AX ODYCY hotel.
The sustainability of the dividend must be viewed in the context of the significant financing required for the next phase of the entire Qawra redevelopment.
BMIT Technologies plc ranks third with a yield of 6.93% based on a net dividend of €0.0183 per share.
Most investors obtained exposure to this equity via the initial public offering some years ago and would correctly point out that the yield is inflated as a result of the sharp decline in the share price over the years.
In the past, the company’s business model was mainly centred around that of a data-centre operator. It is now better described as an infrastructure player following the purchase of the passive mobile towers business from its parent company GO plc, and last year’s 49% acquisition of Malta Properties Company plc.
The dividend cover stands at just 0.8 times, meaning the distribution exceeds reported profits, but shareholders may receive the dividend in new shares (scrip), which makes it sustainable for the company to maintain a high payout.
Furthermore, the amortisation of intangible assets is a non-cash item that reduces the reported profit while leaving cash generation unchanged.
Bank of Valletta plc yields 6.41%, based on the total net dividend of €0.132 per share for 2025. This figure includes a performance-related special dividend of €0.0105 per share, which is based on the extent of the increase in profits compared to the bank’s guidance.
The strong repositioning of the bank’s balance sheet since 2023 amid the changes to the interest rate environment over recent years should lead to continued strong dividends in 2026 and beyond.
While a dividend payout ratio of 50% (dividend cover of 2.0 times) is expected to be maintained, investors should also note that the equity trades at a discount to the net asset value of €2.388 per share.
GO plc’s dividend yield of 6.40% is based on the total net dividend of €0.16 per share distributed in respect of the 2025 financial year.
In Malta, GO has a mature and cash-generative telecoms business which recently completed the roll-out of ‘Fibre to the Home’, leading to an expected decline in capital expenditure in 2026 and in subsequent years.
The dividend should therefore be sustainable from a cash flow perspective, although the market needs to remain attentive of the possible capital requirements for its subsidiary in Cyprus.
It’s not only the yield that matters
Although the league table is very useful, a high dividend yield should never be the sole, or even the principal, basis for an equity investment decision.
While many Maltese investors continue to gauge the attractiveness of a share from a dividend perspective, the rationale for an equity investment ought to rest on several other factors including the cash-generation potential of companies and subsequent capital growth prospects.
Cash flow is a key consideration. Investors must distinguish between the profit figure and the cash a company actually generates.
The reported profits in the income statement are sometimes impacted by a variety of non-cash items, such as depreciation and amortisation as well as fair-value movements on investment property and impairment charges.
A dividend, on the other hand, must ultimately be paid in cash. For the income-oriented investor, the sustainability of a dividend must be judged by the strength and consistency of operating cash flow rather than by the profit figure that is generally given most importance across company announcements.
The quality and direction of profitability is another important consideration to gauge the sustainability of future dividends. The trajectory of profits and the background to profitability levels always merit close scrutiny.
As indicated earlier, dividend yields can seem to be inflated due to a falling share price.
A dividend yield is the product of two variables, namely the absolute dividend to shareholders and the share price. Investors need to monitor trends of the absolute dividends and not only of a yield at a particular point in time. Since a high yield can be caused by a sharp decline in a company’s share price, investors ought to investigate the reasons for such a downward movement.
Despite these various considerations, a well-covered, cash-backed and growing dividend should surely be appealing for various types of investors. The dividend league table should therefore act as a point of departure to then look beyond the yield by analysing earnings growth, dividend cover, cash generation, other valuation metrics and the durability of the underlying business model.
Essentially, the equity portion of a portfolio must be selected on its full investment merits rather than on the strength of a single metric.
Edward Rizzo is executive director at Rizzo, Farrugia & Co. (Stockbrokers) Ltd.
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