Car & General share price gains 10pc on higher dividend payout
Car and General Sales Executive Tom Mburu (second right), shows the TVS Wego motorcycle to riders during the Boda Boda Safety Awareness Day. PHOTO | POOL
The stock was however thinly traded yesterday with only 800 shares changing hands, indicating that investors were keen to hold on to the stock ahead of the enhanced dividend payout.
C&G says its business performed well across the board, with rising demand for its brands of motorcycles and tuk-tuks while its lending arm Watu Credit also registered significant growth.
The Car&General #ticker:CGEN share gained 10 percent on Thursday after the company announced it is quadrupling its dividend payout to Sh3.20 a share on top of a bonus share issuance.
The NSE’s #ticker:NSE only listed automobile firm opened trading at Sh30.60 on Thursday — having shed 9.6 percent on Wednesday — but quickly reversed the losses to close the day at Sh33.70 on the back of the positive dividend announcement that will see shareholders take home a cumulative Sh128.3 million.
The stock was however thinly traded yesterday with only 800 shares changing hands, indicating that investors were keen to hold on to the stock ahead of the enhanced dividend payout.
The enhanced dividend for the year ended September 2021 follows the firm tripling its net income to Sh887.2 million, with revenue going up by 41.4 percent to Sh17.1 billion.
C&G says its business performed well across the board, with rising demand for its brands of motorcycles and tuk-tuks while its lending arm Watu Credit also registered significant growth.
“Overall, sales in Kenya grew 55 percent and sales outside Kenya grew 22 percent. Uganda and Tanzania now represent over 35 percent of Group sales. Our two-wheeler and three-wheeler businesses experienced reasonable growth,” the company said.
The company had paid a dividend of Sh0.8 per share in the financial year ended September 2020, a time when most listed firms were looking to conserve cash as a hedge against the uncertainty and economic downturn caused by the Covid pandemic.
The issuance of a one-for-one bonus is also likely to drive demand for the stock ahead of book closure on the issuance on March 24, even though the bonus shares are not entitled to the Sh3.20 dividend.
Companies rarely combine a dividend payout with a bonus share issuance, with the latter normally issued in lieu of dividends to reward shareholders to allow a firm to conserve cash holdings for capital needs.
