Capital Markets

Top firms weather 2015 storm to pay Sh87bn dividends

Safaricom CEO Bob Collymore. PHOTO | FILE
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 

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.

Barclays also maintained its dividend for the second year running at Sh1 per share after profits plateaued at Sh8.40 billion in the year to December 2015 from Sh8.38 billion a year earlier.

The Sh5.4 earned by shareholders works out to a dividend payout ratio of 65 per cent compared to 50 per cent in 2013.

StanChart kept its dividend at Sh17 per share despite the net profit plunging 39 per cent on mounting volumes of sour loans. The London-based high-street lender — which issued a profit warning last November — reported an after-tax profit of Sh6.3 billion down from Sh10.4 billion in 2014.

EABL is yet to announce full-year results as its reporting period ends on June 30.

The Diageo-owned brewer, however, last month announced a special dividend of Sh4.50 per share from the sale of its glass-making subsidiary Central Glass Industries Ltd.

EABL also paid out an interim dividend of Sh2 per share after posting a Sh7.7 billion net profit in the half-year to December 2015.

Of the top 20 firms, Co-op Bank increased its dividend by the highest margin to Sh0.80 per share from Sh0.50 in 2014, a 60 per cent jump.

The homegrown lender — owned 64.56 per cent by Kenya’s co-operative movement — is paying out a total of Sh3.9 billion in dividends, representing a third of the Sh11.7 billion after-tax profit it made in 2015.

Britam maintained its dividend at Sh0.30 a share despite announcing a loss of Sh1 billion for the year ended December 2015. The financial services firm turned to its reserves to appease shareholders with a Sh581.5 million dividend payout.

Jubilee Insurance also kept its dividend at the previous year’s level of Sh8.50 per share after net earnings stagnated at Sh3.1 billion in a year that saw the majority of insurance firms — except Kenya Re and CiC Group — post losses.

Its total dividend payout for the year 2015 grew to Sh560 million from Sh509 million a year earlier thanks to a bonus issue which increased the number of issued shares by 5.99 million to 65.885 million ordinary stocks.

Cement firm ARM, which also blends fertiliser, swung into the red with a Sh2.9 billion loss for the period to December 2015 compared to Sh1.49 billion net profit a year earlier, weighed down by expensive short-term loans and margin pressures. The cement firm didn’t pay a dividend having paid Sh0.60 per share in 2014.

Centum has since 2009 adopted a no-dividend policy, saying the profit-retention strategy will help fund its growth and deliver higher returns to shareholders. The investment firm is due to announce full-year results for the period ended March 31 on June 8.

BAT Kenya — which has a policy of paying out 100 per cent of earnings as dividends — gave shareholders Sh49.50 per share last year compared to Sh42.50 in 2014.