Top listed firms weather 2017 poll storm to retain dividend payouts for investors

Investors in blue chip companies will look back on the 2017 financial year with satisfaction despite a tough operating environment for most firms and the economy.

The improved run of their shares at Nairobi Securities Exchange (NSE) will see them walk home with bonuses, even as most firms endured the stormy year to declare dividends even as profits fell.

Of the top 20 firms by market capitalisation, only investors in the Kenya Electricity Generating Company (KenGen) and Kenya Airways (KQ) will miss dividends, just as it were in the previous year.

Investors are set for a reward after most companies retained dividends in a trading year that saw chief executive officers (CEOs) complain of a lengthy political season, interest rate cap and reduced access to credit.

National carrier KQ went through a tough restructuring process, even as a new CEO came on board.

For KenGen, the management is reinvesting and wants investors to be content with the good run of its share on NSE.

“KenGen share has continued to report decent capital gains and the board is of the view that reinvestment of the cash generated in the projects pipeline represents better value for shareholders,” said Chairman Joshua Choge.

Share prices

Last year, the bourse registered huge gains in share prices, growing the wealth of most investors by Sh567.2 billion.

After the first quarter, the market has been on a sustained path, thanks to banking stocks and Safaricom shares.

Safaricom even touched an all-time high of Sh33.50. While this is good news, its shareholders had better news on the dividend front. Safaricom paid a total dividend of Sh38.8 billion, being the all-time high in Kenya’s corporate history.

In 2016, it had paid Sh30.5 billion. On October 19, 2017, the company disbursed the money to its shareholders after declaring a dividend of Sh0.97 for every share held. This was after making a net profit of Sh48.4 billion.

National Treasury, with a 35 per cent stake, received Sh13.6 billion even as British telco Vodafone, with 40 per cent stake, took home Sh15.52 billion.

Top banks also withstood the storms of interest rate cap regulation to maintain dividends on their menu, as their share prices continued to make decent gains on the Nairobi bourse.

Equity Bank Holdings maintained its dividend payout at Sh2 per ordinary share and is set to pay shareholders about Sh7.54 billion at the end of this month.

The bank, which has the second highest capitalisation on the bourse after Safaricom, posted a surprise 14 per cent growth in profits to Sh18.9 billion to join the league of 10 banks that grew bottom lines in the era of rate caps.

KCB Group, which returned a flat growth in profits, also announced a final dividend of Sh2 per share. This will be paid on June 29. The directors have recommended a final dividend of Sh6.13 billion, which together with an interim dividend of Sh3.066 billion paid during the year will bring total dividend to Sh9.2 billion.

This was the same payout in 2016. This means that National Treasury with a shareholding of 17.53 per cent at the close of December 2017 will have received about Sh1.61 billion.

National Social Security Fund, with a stake of 5.64 per cent will pocket about Sh520 million.

Cooperative Bank of Kenya also retained a Sh0.80 per share despite a drop in profits. It is expected to make the payment on May 31. It has proposed dividends of Sh4.69 billion. Despite Standard Chartered Bank of Kenya posting a 24.2 per cent - Sh1.94 billion - drop in profits, the bank is to issue dividends, even though it has cut them by 15 per cent.

While in 2016 it paid Sh20 per ordinary share, it will now pay Sh17 on last year’s performance.

In October, it paid out Sh4.50 per share as interim dividend and is now set for a final dividend of Sh12.50 after the May 24 Annual General Meeting (AGM).

Stanbic Bank, which also saw a drop in net profit from Sh4.4 billion to Sh4.3 billion, has retained total dividend at Sh12.31 per ordinary share as it was in 2016.

Directors have already paid an interim dividend of Sh2.93 per share equivalent to Sh500 million. Subject to shareholders’ approval at the AGM, investors will get a final dividend of Sh9.38 per share, equivalent to a sum of Sh1.6 billon.

This will bring total dividend in the rocky year to Sh2.1 billion, the same as 2016.

Barclays Bank of Kenya also retained its total payout at Sh5.42 billion paid in 2016. It has already paid out an interim dividend of Sh0.20 per share and will be paying a final one of Sh0.80 in May once approved.

Diamond Trust Bank Kenya announced a dividend of Sh2.60 (same as 2016) and will be making a total payment of Sh727 million in June.

I&M Bank is also preparing for payment of first and final dividend of Sh3.50 per share on or after May 24. The bank saw a six per cent decline in its profit after tax to Sh9.9 billion.

But NIC Bank cut its dividend from Sh1.25 per share to Sh1 per share as its profit dropped by 4.4 per cent to Sh4.14 billion.

Total payout, set for May 25, will be Sh640 million compared to Sh800 million paid in 2016.

However, the firm has proposed a bonus issue of 1:10 meaning that a shareholder will get one share for each 10 shares held.

Away from the banking sector, Jubilee Insurance carried on with its tradition of increased dividend payout.

Its shareholders will cash Sh9 per share, up from Sh8.50 in 2016.

“Since listing in 1984, Jubilee Holdings has always declared dividends and has never declared a lower dividend than the previous year,” states the insurer in its books.

While in 2016 it paid a dividend of Sh560 million, its investors are set to receive Sh652 million for last year’s performance. The payment will be on July 25.

Data about the firm gathered by Financial Standard shows that since 2007, the company has also consistently grown its profits.

Last week, it announced a 15 per cent growth in 2017 profits to Sh4.23 billion in a period Chairman Nizar Juma described as “challenging year for the insurance industry across the region.”

Another insurer, Britam was not deterred by the 79 per cent tumble in profit to Sh527 million.

It went ahead and increased dividend per share from Sh0.30 to Sh0.35. In 2016, it paid out Sh581.5 million as dividends.

From last year’s results, the insurer is set to pay Sh756.9 million as dividends in mid-June.

Beer-maker East African Breweries also kept its payout at Sh7.50 per share though its shareholders will not get any special dividend as was the case in 2016.

Against a six per cent net profit growth to Sh8.5 billion in the year ended June 2017, it paid out a total of Sh5.93 billion in interim and final dividend.

In 2016, it paid out Sh9.49 billion even though this was boosted by a special dividend of Sh3.56 billion as part of the proceeds from disposal of the glass business. Its investors are now receiving an interim dividend of Sh2 per share despite 11 per cent drop in half-year profits for the period ended December 2017.

After turning away from its zero dividend policy that ran for several years, investment firm Centum also increased its dividend per share from Sh1 to Sh1.20.

It used Sh798.5 million to pay dividends, up from Sh665.4 million in 2016. This is despite a 16.48 per cent drop in net profit to Sh8.31 billion for the 12 months ended March last year.

Net earnings

In the energy sector, KenolKobil’s performance was weighed down by one-off costs, leading to a slower jump in net earnings.

However, it increased dividend per share from Sh0.45 to Sh0.60.

In total, the firm is set to pay Sh883 million, up from Sh662 paid against the 2016 performance.

But investors in BAT Kenya and Bamburi Cement will have a reduced benefit. Bamburi Cement’s profit plunged by 67 per cent, making it post the lowest bottom-line in over a decade.

The board cut dividends by more than half in the financial year that saw it issue a profit warning. Unlike in 2016 when it paid Sh4.35 billion as total dividends, investors are set to get Sh3.1 billion against the depressed 2017 performance.

The board has recommended a final dividend of Sh1.50 per ordinary share, down from Sh6 paid in the previous year.

The final dividend, added to an interim dividend of Sh2.50 paid in October last year will amount to Sh4, translating to a 67 per cent cut in dividends per share. In 2016, shareholders earned Sh12 on every ordinary share.

For BAT, which has a policy to distribute 100 per cent of profit after tax as dividends, investors will feel the heat of the drop in earnings.

Investors will earn Sh26 per ordinary share as total dividend per share, down by 40 per cent from Sh43 per share in 2016.

[email protected]