Top firms weather 2015 storm to pay Sh87bn dividends

Money Markets

Safaricom CEO Bob Collymore. The growth in investor earnings was mostly powered by the telecoms giant’s huge payout, which at Sh30.4 billion accounted for more than one third of the total dividends. FILE PHOTO | NATION MEDIA GROUP 

By DAVID HERBLING, hdavid@ke.nationmedia.com

Top Nairobi Securities Exchange (NSE)-listed firms defied last year’s harsh economic environment to grow their total dividend payout by a tenth to Sh83.7 billion — keeping company ownership on the list of the most rewarding investment options in Kenya.

Market data show that the 20 biggest public listed firms, by market capitalisation, increased their dividend payout 9.9 per cent for the trading period which saw 18 companies or a quarter of all companies at the bourse issue profit alerts.

The growth in investor earnings was mostly powered by telecoms giant Safaricom’s huge payout, which at Sh30.4 billion accounted for more than one third of the total dividends.

“The reality is that Safaricom’s performance wiped out the poor show by the majority of listed firms,” said Kariithi Murimi, a risk consultant.

“Some of these companies paid dividends from accumulated earnings. There is need to interrogate what strategic decisions these companies made to deliver such dividends.”

More than half of the 20 largest companies did not pay dividends, kept the payout flat or delivered a windfall to shareholders through bonus shares.

The list of Kenya’s top listed firms by market value includes Equity Group, KCB Group, Barclays, StanChart, EABL, BAT Kenya, Bamburi Cement, CFC Stanbic, Co-op Bank, Uganda’s electricity retailer Umeme and Nation Media Group.

I&M Holdings, NIC Bank, Britam, Jubilee Insurance, DTB, Kenya Power, ARM Cement, and investment company Centum also make the list.

Safaricom — Kenya’s most profitable and largest listed company by market capitalisation — increased its dividend by a fifth to Sh0.76 per share, meaning shareholders are entitled to Sh30.4 billion for the period ended March 2016.

Safaricom’s dividend payout represents 80 per cent of its Sh38.1 billion net income for the period under review.

Top-tier lender Equity Group also weathered the storm to increase its dividend to Sh2 per share from Sh1.80 a share after it posted a marginal net profit growth to Sh17.3 billion compared to Sh17.1 billion the previous year.

That left the bank’s 29,000 shareholders with Sh7.5 billion take-home and second to Safaricom in the size of payout. Equity’s list of shareholders includes Norfund (12.223 per cent), financial services firm Britam (6.35 per cent), and chief executive James Mwangi, who owns 4.54 per cent of the lender.

KCB froze dividend at Sh2 for the third year in a row and offered to pay through issuance of new shares in a process technically known as scrip dividend.

Half of the dividend will be paid out in cash with an option to pay the remaining Sh1 through a scrip dividend priced at Sh38.00 per share.

If all KCB shareholders elect the scrip dividend offer, a total of 78.2 million new shares will be issued out, a process that analysts said should help recapitalise the lender.