Capital Markets

Bear market raises bank dividend returns to 9.6pc


Stanchart has the highest yield at 15.3 percent, beating the rate on the majority of government bonds. FILE PHOTO | NMG

The ongoing bear market has raised the dividend yield on listed bank shares to an average of 9.63 percent, boosting returns for investors buying now for the long term.

The decline in share prices has lifted the cash yield on bank stocks to a range of between 5.9 percent and 15.3 percent, according to market data.

The 9.63 percent average dividend yield is higher than the returns on most money market funds and rivals the rate on the 364-day Treasury bill which stood at 9.96 percent in the latest auction.

Besides dividends, long-term bank investors also stand to benefit from capital gains.

The cash returns on bank stocks are based on the total dividends they have paid or announced for the year ended December and their current stock prices.

Stanchart has the highest yield at 15.3 percent, beating the rate on the majority of government bonds. The bank lifted its payout to Sh19 per share and its stock price had declined to close at Sh123.7 on Monday.

Stanchart, which has the most generous dividend policy, says it intends to maintain its tradition of distributing any excess capital to shareholders.

NCBA’s cash return is at 12.2 percent based on the lender’s enhanced payout of Sh3 per share and its latest share price of Sh24.4.

Absa has a 10.2 percent yield after reinstating dividends of Sh1.1 per share. Its stock traded at Sh10.7 on Monday.

Co-op Bank’s dividend return stands at 9.1 percent. The lender, whose share price closed at Sh10.9, maintained a payout of Sh1 per share.

I&M Group’s yield has increased to 9.09 percent, reflecting a drop in its stock price to Sh16.5 and a rise in its dividend payout to Sh1.5 per share.

Stanbic’s dividend return stands at 9 percent after the bank lifted its payout to Sh9 per share. Its stock has declined to trade at Sh100.

The general stock market selloff intensified after most of the listed banks closed their books for dividends.

Most of the banks raised their dividends after posting strong earnings growth in the year ended December, marking a recovery from the slump in the prior year when coronavirus-related defaults and provisions ate into their bottom line.

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