Tanzania Portland Cement records striking dividend yield

ABDUEL ELINAZA

TANZANIA Portland Cement has recorded dividend yield of 14 per cent for last year being the highest so far for companies that have already announced dividends for 2017.

The amount came after it announced a final dividend of 100/- that makes a total of 220/- for last year. The cement firm is listed at the Dar es Salaam Stock Exchange (DSE) and trades as Twiga Cement. Its share traded at 1,540/- last Friday.

“Such price sensitive news is likely to provide price-support at a time where most listed companies are reporting not-so-good financial results,” Orbit Securities said in its weekly Financial Market Synopsis.

The brokerage firm said further with price-to-earnings (PE) ratio of 8.1 times, Twiga counter becomes worth of further investigation for potential addition to the portfolio. “Declaring dividend amid such operating environment, the announcement signals TPCL management’s confidence in the prospects of the company going forward,” Orbit said.

The cement firm earnings decreased 3.0 per cent to 268.21bn/- last year from 277.23bn/- a year before despite volume increase by 7.0 per cent over the same period. On other hand, operating profit gained 16.0 per cent due to one-off sale of fixed assets, net profit for the year was down 12 per cent to 35.60bn/- from 39.84bn/- posted the year before.

Another cement firm, Tanga Cement Company Limited, which is also listed at the Dar es Salaam Stock Exchange (DSE) was also in the news last week, giving notice to members about the forthcoming Annual General Meeting late this month.

Disappointing part of the announcement is the board’s proposal to member of not declaring dividend for the 2017 financial year.

“This was expected following disappointing six months results issued late last year which was preceded by the management cautionary note on the financial performance,” Orbit said. Still cigarette firm shareholders are the most affected so after losing 53 per cent dividend yield last year in comparison to dividend declared in 2016.

TCC, largest cigarette producer, paid a dividend of 200/- last year which against early this month share price of 16,300/- it translates to a dividend yield of 1.2 per cent a share.

The cigarette firm paid a dividend of 300/- in 2016 that produced a dividend yield of 2.6 per cent at price of 11,500/-a share. Zan Securities CEO, Raphael Masumbuko said when a firm dividend yield declined, it impacts negatively on investors’ appetite for its shares.

Masumbuko told the `Daily News’ that the industry acceptable dividend yield loss should be around 10 per cent. CRDB Bank had recommended a dividend of 5/- lower than 10/- of previous year which translated to a dividend yield of 2.85 per cent at 175/- at beginning of this month and 4.65 per cent at 215/- last February price.

The yield loss comes to almost 30 per cent. The loss, though higher than sector benchmark, did not divert investors buying CRDB share.

The shares of CRDB, the largest bank, has gained by over 6.00 per cent to 175/- since January. Swissport dividend yield loss also was above sector benchmark at 26.5 per cent. The dividend yield, of airport ground handling firm, stands at 4.6 per cent this year compared to 6.25 per cent of previous year against share prices of 3,540/- and 5,400/- respectively.

Swissport share had dipped by 1.1 per cent to 3,540/- in the last four months. Stockbrokers predict that given the last year economic environment majority of listed firms are expected to declare low dividends this year compared to the previous.