UPDATED: Kenya’s Highest Dividend Paying Stocks [2020]
Many people invest in dividend-paying stocks to take advantage of the steady income and reinvestment opportunities available. However, it is important to note that not all stocks pay dividends and also, not all stocks that pay dividends are worth owning.
Any stock company worth owning eventually makes real money for its investors and has three options:
- Reinvest earnings into the company by expanding operations, increasing business efficiencies, launching a new product…etc. This increases the company’s value which is then reflected in the market price.
- Buyback shares so that each remaining share owns more of the company translating to more profitability in the next year.
- Return some of the money invested to shareholders in the form of dividends or bonus issues.
If you are reading this, that means your primary consideration is the amount of dividends that the company pays, over capital appreciation (increase in share price).
What Are Dividend Paying Stocks?
A dividend is essentially a small payment of earnings by a company to shareholders in proportion to the number of shares they own.
For example, assume I own a portion of 10,000 shares of KCB whose current market price is Kes. 52. The total value of the shares I own is Kes. 520,000. This year KCB announced a final dividend of Kes. 2. The payment I will get for my 10,000 shares is Kes. 2 x 10,000 shares = Kes. 20,000.
NSE List of Stocks that Pay Dividends
Below is a list of all dividend-paying stocks of 2017- 2018 listed on the Nairobi Stock Exchange (NSE):
2018
| Company | Dividend Yield | Price | Final Dividend |
| Bamburi Cement | 0.86% | Kes. 175.00 | Kes. 1.50 |
| Barclays Bank | 6.37% | Kes. 12.55 | Kes. 0.80 |
| British-American Investment Company (K) | 2.80% | Kes. 12.50 | Kes. 0.35 |
| British American Tobacco Kenya | 2.89% | Kes. 779.00 | Kes. 22.50 |
| Car & General (K) | 2.40% | Kes. 25.00 | Kes. 0.60 |
| Co-operative Bank of Kenya | 4.08% | Kes. 19.60 | Kes. 0.80 |
| CIC Insurance | 2.35% | Kes. 5.10 | Kes. 0.12 |
| Diamond Trust Bank Kenya | 1.21% | Kes. 215.00 | Kes. 2.60 |
| East African Breweries | 0.75% | Kes. 265.00 | Kes. 2.00 |
| Equity Group Holdings | 3.70% | Kes. 54.00 | Kes. 2.00 |
| Housing Finance Group | 3.00% | Kes. 11.65 | Kes. 0.35 |
| I&M Holdings | 2.80% | Kes. 125.00 | Kes. 3.50 |
| Kakuzi | 1.92% | Kes. 365.00 | Kes. 7.00 |
| KenolKobil Co | 1.71% | Kes. 17.55 | Kes. 0.30 |
| Kenya Commerical Bank | 3.85% | Kes. 52.00 | Kes. 2.00 |
| Kenya Re-Insurance Corporation | 4.91% | Kes. 17.30 | Kes. 0.85 |
| Liberty Kenya Holdings | 3.53% | Kes. 14.15 | Kes. 0.50 |
| NSE | 1.43% | Kes. 21.00 | Kes. 0.30 |
| NIC Bank | 2.42% | Kes. 41.25 | Kes. 1.00 |
| Sasini Tea & Coffee | 3.00% | Kes. 25.00 | Kes. 0.75 |
| Standard Chartered Bank | 5.48% | Kes. 228.00 | Kes. 12.50 |
| Total Kenya | 3.97% | Kes. 32.75 | Kes. 1.30 |
| Umeme | 1.70% | Kes. 12.25 | Ush. 7.60 |
Source: Nairobi Stock Exchange (NSE) Announcements
2017
| Company | Dividend Yield | Price | Final Dividend |
| B.O.C Kenya | 3.23% | Kes. 93.00 | Kes. 3.00 |
| Centum Investment Company | 2.71% | Kes. 44.25 | Kes. 1.20 |
| Carbacid Investments | 5.60% | Kes. 12.50 | Kes. 0.70 |
| Crown Paints Kenya | 0.74% | Kes. 81.00 | Kes. 0.60 |
| Kapchorua Tea Co. | 4.05% | Kes. 74.00 | Kes. 3.00 |
| Kenya Power & Lighting | 6.41% | Kes. 7.80 | Kes. 0.50 |
| Longhorn Publishers | 6.17% | Kes. 4.70 | Kes. 0.29 |
| Nation Media Group | 6.76% | Kes. 111.00 | Kes. 7.50 |
| Safaricom Limited | 3.10% | Kes.31.25 | Kes. 0.97 |
| TPS Eastern Africa | 1.04% | Kes. 33.50 | Kes. 0.35 |
| Unga Group | 2.50% | Kes. 40.00 | Kes. 1.00 |
| Williamson Tea Kenya | 6.67% | Kes. 150.00 | Kes. 10.00 |
| WPP ScanGroup | 2.94% | Kes. 17.00 | Kes. 0.50 |
Source: Nairobi Stock Exchange (NSE) Announcements
Notes:
Dividend Yield – here, the company dividends are expressed as a percentage of the current market price. It indicates the percentage of return that you can expect by way of dividends on your investment at the prevailing current market price.
What is A High Dividend Paying Stock?
A high dividend-paying stock is any stock with a dividend yield above 4%, however, I personally wouldn’t invest in any stock beyond 10% in yield. Given the 2017 electioneering and market performance, most of these yields may have changed in comparison to the previous years.
Why 4%?
It is a sensible cutoff given that the safe withdrawal rate for any investment (particularly retirement funds) is actually 4%. See How to Produce Income From Investing Forever.
Why Not Above 10%?
- Too risky – there are companies that pay dividends to increase failing shares prices. Fortunately, listed companies must announce their financial information – which means that the information is available to anyone who knows how to effectively utilize it.
- Most high dividend yield companies are not the conventional blue-chip companies, but rather have unique business structures and risk to be carefully considered.
Highest Dividend Paying Stocks
The following are the Nairobi Stock Exchange’s (NSE) highest dividend-paying stocks for the periods 2017 – 2018:
| Highest Dividend Paying Stocks | Final Dividend | Dividend Yield | Current Price |
| Williamson Tea Kenya | Kes. 10.00 | 6.67% | Kes. 150.00 |
| British American Tobacco Kenya | Kes. 22.50 | 2.89% | Kes. 779.00 |
| Standard Chartered Bank | Kes. 12.50 | 5.48% | Kes. 228.00 |
| Nation Media Group | Kes. 7.50 | 6.76% | Kes. 111.00 |
| Kakuzi | Kes. 7.00 | 1.92% | Kes. 365.00 |
| I&M Holdings | Kes. 3.50 | 2.80% | Kes. 125.00 |
| Kapchorua Tea Co. | Kes. 3.00 | 4.05% | Kes. 74.00 |
| B.O.C Kenya | Kes. 3.00 | 3.23% | Kes. 93.00 |
| Diamond Trust | Kes. 2.60 | 1.21% | Kes. 215.00 |
| EABL | Kes. 2.00 | 0.75% | Kes. 265.00 |
| Equity Group | Kes. 2.00 | 3.70% | Kes. 54.00 |
| Kenya Commerical Bank | Kes. 2.00 | 3.85% | Kes. 52.00 |
The dividend yield is one of the main factors to consider when looking to invest in dividend-paying stocks:
| Highest Dividend Yield Stocks | Dividend Yield | Current Price | Dividend |
| Kapchorua Tea Co. | 4.05% | Kes. 74.00 | Kes. 3.00 |
| Co-operative Bank | 4.08% | Kes. 19.60 | Kes. 0.80 |
| Kenya Re-Insurance | 4.91% | Kes. 17.30 | Kes. 0.85 |
| Standard Chartered | 5.48% | Kes. 228.00 | Kes. 12.50 |
| Carbacid Investments | 5.60% | Kes. 12.50 | Kes. 0.70 |
| Longhorn Publishers | 6.17% | Kes. 4.70 | Kes. 0.29 |
| Barclays Bank | 6.37% | Kes. 12.55 | Kes. 0.80 |
| Kenya Power & Lighting | 6.41% | Kes. 7.80 | Kes. 0.50 |
| Williamson Tea Kenya | 6.67% | Kes. 150.00 | Kes. 10.00 |
| Nation Media Group | 6.76% | Kes. 111.00 | Kes. 7.50 |
Which of these is Safe?
There are a number of steps or considerations to weigh when picking the safest high dividend-paying stock. You’ll need to take into consideration the biggest risk factors of any company you choose to buy. Here are some of the biggest risk factors to be aware of when selecting high dividend-paying stocks include:
- The industry the company operates in. What is the general trend of the industry i.e. is it growing or declining?
- The amount of operating leverage in its business model. How much is their fixed costs (rent, utilities..etc) over their variable costs (costs that vary depending on output or sales)? It is better to have lower fixed costs in relation to variable costs – for instance, take Uchumi it has many stores (fixed rental costs) and without sales, they would not be able to cover their most basic cost.
- The amount of financial leverage (debt) on their balance sheet. Debt should not more than half of the total invested amount.
- The size of the company. Is the company still growing or is it at its maturity stage?
- The current valuation multiple– measures the return on investment.
Should You Invest in the Highest Dividend Paying Stocks?
Not in every situation! Realize that a high dividend-paying stock is paying dividends at a higher rate than average. The reason behind this decision by any company is what you need to seriously consider.
Make no mistake. You might actually find a great company that pays dividends. However, you cannot rule out the greater probability that you might also find a company that is merely looking to drive up share price for one reason or another. Other times, the company may simply be in trouble – you really cannot tell until you look into the business structure and financials. One has to be cautious because companies do adopt accounting tricks to draw in uncautious investors to inflate the stock price to artificial levels.
What’s more, keep in mind that it isn’t mandatory for a company to pay dividends. That is why companies sometimes, a company may pay and other times may choose not to or even vary the amount paid.
Final Thoughts
Dividends are great but value and dividends are even better. Note that not all amazing stocks pay a dividend – some never do. It all depends. Therefore, if you find an undervalued stock that sometimes pays dividends, then you have found a true gem.
Happy Investing!
Meanwhile, You can click on the following links to read more about financial planning:
- Buy!! The Financial Planning Workbook
- Buy!! The Financial Planner – Excel Template
- How to Produce Income From Investing Forever
- How to Determine Which Shares to Buy the on the NSE
- What is the Minimum Amount to Invest in Nairobi Stock Exchange?
- How to Buy Stocks Online on the Nairobi Stock Exchange
Disclosure: This information is provided to you as a resource for informational purposes only. It is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal. This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.