The Baltic Exchange: what and why to buy on Tallinn Stock Exchange in 2026?

When it comes to investing, most people's eyes immediately go to the ocean. The talk is From, Tesla, Microsoft and the artificial intelligence revolution. It's only natural - these are the companies that are changing the world and are the ones that get the most news coverage.

But while investors are chasing the next big thing in the US tech sector, money is literally at our feet.

Tallinn, Riga and Vilnius Stock Exchanges (jointly). Nasdaq Baltic) are small and often overlooked in the European context. For foreign investors, it is a “periphery”. But for the local investor it is goldilocks, especially if the objective is passive income or dividends.

It will be a landmark year for the Baltic Stock Exchange. The economy is emerging from the slowdown of the past few years, interest rates are normalising and local companies have proven their resilience. In this article, we take a look at why the “home stock market” is attractive right now, which sectors are hot and which specific companies are worth keeping on your radar.

Why look at the Baltic Stock Exchange at all?

Before moving on to equities, let's dispel the myth that “nothing happens on the Estonian stock market”. Here are three reasons why at least 10-20% of your portfolio should be in the Baltics:

1. World-class dividend yield

The average dividend yield of the US S&P 500 index has historically been in the range of 1.5-2%. Many technology companies do not pay dividends at all. On the other hand, companies on the main list of the Baltic stock exchange often offer a dividend of 5-8% dividend yields. This means that just by owning a share (without the price going up), you make a significant amount of money back. This is ideal for the investor who wants a real cash flow from their investment to pay bills or reinvest.

2. The home field advantage and “skin in the game”

Peter Lynch, the legendary investor, recommended investing in what you know. In the Baltic Stock Exchange, it's easy. You buy milk from Selver (Tallinn Kaubamaja Group). You use LHV bank. Your electricity comes from the Enefit Green wind farm and your water from Tallinn Water. You can see with your own eyes if there are queues in the shops or if the ports are full of ships. This gives you an IT advantage over a Wall Street analyst who's never been to Estonia.

3. Unpaid fees

Most of the major Estonian banks (LHV, Swedbank, SEB) have traded Baltic equities. free of charge or very favourable. This is a huge advantage, especially for a beginner. If you want to buy a US share for €100, the service fee (minimum e.g. €9-15 plus currency exchange) can eat up 10-15% of your money already at the start. A Baltic share can be bought for as little as €10 and you don't pay a cent commission to the bank. This allows you to spread your purchases over time (buy a little bit each month).

Sectors and pearls: what to watch in 2026?

Let's take a look at the three main sectors that form the backbone of the Baltic Stock Exchange.

1. Banking: the lifeblood of the economy

Banks have been the absolute stars of the Baltic stock market in recent years. While EURIBOR have fallen below peak by 2026, bank profitability will remain strong as demand for credit recovers in line with economic growth.

LHV Group (LHV1T): It's not just a bank, it's an Estonian people's share. LHV is a growth story. Even if they are already big, they are finding new niches (UK banking licence, pension fund volumes).
- Why follow: LHV is a rare combination of a growth share and a dividend share. Their P/E ratio is usually higher than their peers (i.e. the stock is more expensive), but this reflects investors' faith in management.
Coop Pank (CPA1T): “Domestic and simple”. Coop Bank targets the retail and small business sector outside Tallinn's “golden circle”. Their strategy of integrating banking and commerce (Coop stores) is working.
- Why follow: Aggressive market-grabbing by the big Swedish banks continues.
Šiaulių bankas (SAB1L): Lithuanian pearl. Often unfairly overlooked because it is a Lithuanian company. Historically one of the best dividend yielding banks in the Baltics.
- Why follow: If you're looking for cheap value (low P/E) and a high dividend, it's often the best choice in the sector.

2026 trend: Watch how banks adjust to lower interest rates. The winners will be those that can increase lending volumes (“volume offsets margin”).

2. Energy and utilities: boring is good

This sector is for those who want to sleep well at night. People need electricity and water even when the economy is in crisis.

Enefit Green (EGR1T): A renewable energy giant. After the post-IPO euphoria and subsequent sobering up (high interest rates made new wind farms expensive to build), the picture will be clear by 2026.
- Why follow: The green shoots have not stopped. Enefit has new parks in the pipeline that are now starting to show better profitability in a lower interest rate environment. This is a long-term contribution to clean energy.
Ignitis (IGN1L): Lithuania's energy giant. Many Estonian investors prefer Ignitis to Enefit precisely because of its stability and very clear dividend policy. They are very well established in the region.
Tallinn Water (TVEAT): The most boring stock on the stock exchange - and that's a compliment. Stable cash flow, stable dividend. Doesn't offer great growth, but is an excellent “pension pillar” and inflation hedge (water prices are adjusted for costs).

3. Trade and real estate: consumer comeback

Inflation is under control and consumer purchasing power will increase in 2026. This is good news for traders.

Tallinna Kaubamaja Grupp (TKM1T): Estonian dividend aristocrat. They have paid dividends every year, even during crises. The group owns Kaubamaja, Selver, car centres (KIA) and real estate.
- Why follow: A very well run company. Car trade is cyclical, but grocery (Selver) is a stable foundation. Their dividend yield is almost always attractive.
Real estate funds (EFTEN, etc.): There are a number of real estate funds on the stock exchange (e.g. EfTEN Real Estate Fund). As interest rates fall, their borrowing costs fall and the value of real estate rises. 2026 could be the year when the real estate sector starts to shine again.

“Fallen angels” and special situations

Sometimes the greatest rewards lie where others see fear.

Tallink Grupp (TAL1T): The shipping giant was hit by Covid and geopolitics. But the Baltic Sea hasn't disappeared and people still want to travel. The company has worked hard to reduce its debt burden. If they can restore a stable dividend, the share price is potentially undervalued.
DelfinGroup (DGR1R): Latvian financial services company (pawnshops, small loans). Very high dividend yield but higher risk business model. Suitable for investors who dare to take risks in the Latvian market.

The “downside” of the Baltic market: liquidity

All is not rosy. There is one big downside to the Baltic stock market, which can often burn beginners. It is liquidity or tradability.

Let's compare:

If you want to sell Apple shares for €1 million, the transaction takes place in milliseconds and the price doesn't change.
If you want to sell shares in a small company on the Baltic stock exchange for €10 000, you may find that there are simply no buyers. In order to get rid of the shares, you have to lower the price, which brings the market price down.

What does it mean for you? Baltic stocks are not suitable for “day trading”. They are instruments that are bought with a long-term plan (“buy and hold”). You need to be prepared to hold them for years. If you need to get money quickly (within a week), this can be problematic or costly, especially for smaller companies (First North list). However, for the core list (LHV, Kaubamaja, Enefit), liquidity is sufficient for the retail investor.

How are Baltic dividends taxed?

In the previous article, we talked about the Investment Account. For Baltic equities, the situation is a little more nuanced.

Estonian companies (LHV, Kaubamaja, Enefit): The company withholds the income tax (usually 22% or 14% on regular dividends). The net amount is credited to your bank account.
- For investment account users: Since the income tax has already been paid, you don't have to pay tax on the money again when you withdraw it. However, you will not get a refund of the overpaid tax. This is “tax-free income” that you can use immediately.
Lithuanian and Latvian companies (Ignitis, Šiauliai, DelfinGroup): You need to be careful here. Latvia and Lithuania withhold their own national income tax (e.g. 20% in Latvia, 15% in Lithuania). Estonian residents are subject to a double tax treaty. Generally, the money is credited to an account and if you invest as a private person (ordinary account), you can deduct the tax paid abroad in Estonia. For an investment account, this is more complicated and there may be a risk of double taxation on future payments. Recommendation: It is often easier to hold Latvian/Lithuanian shares in a regular account or in Pillar III to avoid excessive bureaucracy.

Summary: Your Baltic Portfolio 2026

The Baltic Stock Exchange won't make you rich overnight. Stocks don't move up and down 20% a day like a crypto market. But that's its strength. It is getting rich slowly and steadily.

Your strategy on the Baltic exchange could be:

Choose quality: Focus on companies that have been on the market for years and pay dividends (Banks, Department Store, Water).
Reinvest: As there are no fees, you can immediately redirect the dividends you receive back into new shares. Create your own “snowball”.
Be patient: Don't be distracted by geopolitical news. Baltic companies are used to operating in this environment.
Scatter: Don't buy from just one bank. Buy banks, energy and trade.

Tallinn Stock Exchange is a great place to learn about investing, get a feel for market psychology and earn decent passive income at the same time. As the saying goes: “An apple brought from afar may be prettier, but an apple from your own garden is sweeter.”