Global firms gain from high dividends at NSE

Multinationals with majority stakes in firms listed on the Nairobi Securities Exchange have emerged key beneficiaries of the rise in dividend payouts in corporate Kenya.

This underlines the growing importance of emerging economies in cushioning earnings of global conglomerates.  

The global giants including BAT, Barclays PLC, Diageo Plc, Linde Group, Lafarge and Sanlam Total will be sending more money to parent companies this year compared to last year helped by corporate Kenya’s growing shift towards fat dividend payouts.

The bulk of the companies have recorded double-digit growth in dividend payments this year on the back of robust earnings growth that left many Kenyan companies with cash piles that most have chosen to give back to shareholders.

“Companies with multinational anchor shareholders are paying higher dividends than those with local shareholders since most of them are mature firms,” said Erick Musau, an analyst at Standard Investment Bank.

Kenya’s financial services firms, which collectively grew their profit to Sh80 billion in 11 months to November compared to Sh74.3 billion in the full year of 2010 – are expected to  top the list of heavy dividend payers—which will enable shareholders grow their takehome by more than half this year, compared to 2011.

One such beneficiary is Barclays Bank.  The bank consequently raised its dividend payout from its operations to Sh1.50  per share from Sh1.36 in 2010, an increase of 10.2 per cent – earning its parent Barclays Plc Sh5.5 billion.

Standard Chartered, which will announce its results on Monday, is expected by analysts to maintain payments to its parent company at Sh2.8 billion despite its quarter-three profits having fallen 10.5 per cent.

The bulk of companies at the NSE have offered fat dividends to calm shareholder nerves and boost their share valuation outlook at the Nairobi bourse—which has faced a bearish run before the earnings season kicked off last month.

BAT, a top performing industrial firm, increased its dividend payment to Sh30.50 from Sh17.50 after it announced a 75 per cent increase in net profits to Sh3 billion – earning its parent company Sh2 billion in dividends.

This made the cigarette maker the second-best firm at the NSE after Barclays Bank based on the dividend yield – a financial ratio that shows how much a company pays out in dividends each year relative to its share price – and one of the most sought-after shares.

BAT’s yield stood at 9.36 per cent compared to Barclays Bank (10.83 per cent), Kenol Kobil (9.17 per cent), KCB (8.71 per cent) and Housing Finance (8.28 per cent).

EABL, which is majority owned by Diageo, also maintained its interim dividend payment at Sh2.50 a share on the 17 per cent rise in profits to Sh4.8 billion in the six months to December.

This earned the UK firm Sh988 million from the half-year results and on course to earning the Sh3.4 billion it received from EABL last year.

Intensify activities

Diageo, like other multinational brewers, has intensified its activities in emerging economies such as Kenya to compensate for falling sales at home.

French conglomerate Lafarge – which owns 58.6 per cent of Bamburi Cement –will also be receiving a fat cheque from its Kenyan subsidiary that reported a 11.1 per cent increase in profits to Sh5.88 billion for the year ended December 2011.

This will see Lafarge’s takehome increase to Sh1.7 billion from Sh1.48 billion in 2011.

Linde Group, which owns 63.4 per cent, of BOC Kenya will earn Sh88 million in dividend after the gas firm doubled dividend to Sh6.80 while South Africa’s Sanlam is set to pocket Sh96 million from Pan African Insurance that grew its dividend 30 per cent to Sh2.
gngigi@ke.nationmedia.com