NSE investors’ 2014 dividends up by Sh13.4 billion

NSE firms have paid Sh13.4 billion more in dividend to shareholders for the 2014 financial year with banks and telecoms operator Safaricom owners topping the list of beneficiaries.

Dividend payout for the period between January 2014 and March this year stood at Sh72.8 billion from Sh59.5 billion for 2013.

Listed banks collectively shovelled out Sh30.9 billion in dividend for the year ending December 2014, an increase of Sh5.4 billion from 2013.

Banks recorded higher earnings in 2014, with the industry unaudited pre-tax profits rising by 13.5 per cent to Sh141.09 billion compared to Sh124.34 billion in 2013.

Safaricom, in the financial year ended March 2014, paid out a dividend of Sh0.47 per share compared to Sh0.31 in March 2013, meaning that the firm’s total dividend payout rose by Sh6.4 billion to Sh18.8 billion.

ABC Capital corporate finance manager Johnson Nderi said the trend for the year indicated that firms significantly owned by foreign parent companies were paying out more in dividend.

“Some of these companies have foreign owners who are cash hungry, so they must pay high dividends. Other than banks and Safaricom, insurance firms are also likely to raise their dividends going forward, led by the likes of Jubilee, Britam and Kenya Re,” said Mr Nderi.

UK-owned BAT, StanChart and French majority held Bamburi paid out the highest dividends per share at Sh42.50, Sh17 and Sh12 respectively, while CfC Stanbic increased its payout from Sh2.15 to Sh6.15 per share between 2013 and 2014.

READ: British companies ship out Sh25bn in 2014 dividends

According to Mr Nderi the decision of whether to pay out a relatively high dividend or retain earnings varies from company to company, but the deciding factor should be whether capital investment ultimately gives shareholders more value than a straight dividend payout.

“Companies intending to do regional expansion for instance can never be said to have too much in cash holdings on their books,” he said.

Increased payout

Other dividend stocks like Nation Media Group and EABL held their payout at a steady Sh10 and Sh5.50 per share respectively, while Jubilee Holdings increased payout from Sh7 to Sh8.50 a share.

EABL, whose financial year ends in June, has already paid out an interim dividend of Sh1.50 for the current financial year.

The firm’s cash holdings have recently been coming down as it funded expansion of its Tanzanian operations, as well as pay debts.

Standard Investment Bank projects the payout to hit Sh11.90 by 2018, as the firm steps back from expansion.

“With the disposal of Central Glass however, and pay down of the Diageo debt in 2017, EABL will be in generally good shape to take up additional debt in 2018 — but we think the company might opt to raise the dividend payout instead,” said SIB analyst Eric Musau in an EABL valuation update last week.

Elsewhere energy and petroleum also saw a big increase in dividend paid out for the year, registering an increase of Sh981 million to Sh3.74 billion, mainly due to Kenya Power paying out a dividend of Sh0.50 per share after paying out none in the year ending June 2013— for a total of Sh975.7 million.

The construction and allied sector paid out Sh4.94 billion in 2014, an increase of Sh295 million, while manufacturing dividends were up by Sh320 million to Sh8.8 billion.

The commercial and services sector paid out Sh292 million more at Sh2.9 billion, with the increase mainly on account of Longhorn.

The agriculture segment, which saw a raft of profit warnings last year, paid out Sh212 million, Sh22 million down compared to 2013.