As the pandemic continues to rage on, some calm has settled on the stock market. Over the last couple of months, several Kenyan companies paid dividends to their shareholders. While most companies are laying off workers, some firms in Kenya have been able to reward shareholders and maintain dividends at the same level during this pandemic.
While being mindful of the optics of paying dividends during this crisis, for most companies its business as usual and most of these dividends go to higher-income Kenyans and foreign investors. Therefore, moving forward if you’ve never considered investing in dividend-paying stocks, it’s never too late to get started.
The Dividend Yield
In order to get the stocks that offer the highest dividend, ergo the highest return on dividend, we calculate the dividend yield.
Calculating the dividend yield is beneficial for the following reasons:
- Calculating the dividend yield is quite easy. We just divide the annual dividend payments by the stock price and convert into a percentage.
- It makes it easier to compare and select stocks based on how much dividend return realized based each per shilling invested. The absolute dividend amount per share is a helpful measure because companies vary widely across.
- Increasing dividend yield points to the financial health of the company that chooses to pay dividends. When a company chooses to raise its dividend, communicates to its investors that it’s doing well since it can afford to pau out more of its profits to shareholders.
Learn more: Kenya’s Highest Dividend Paying Stocks
2020 Dividend Paying Stocks
Here is a summary of the dividend-paying stocks of the Nairobi Stock Exchange (NSE) by sector:
| Stock | Sector | Stock Price | Final Dividend | Dividend Yeild |
| Kakuzi | Agriculture | Ksh 370 | Ksh 14 | 3.78% |
| Limuru Tea | Agriculture | Ksh 400 | Ksh 0.70 | 0.175% |
| Absa Bank Kenya Plc | Banking | Ksh 9.42 | Ksh 0.90 | 9.57% |
| Cooperative Bank of Kenya Ltd | Banking | Ksh 11.35 | Ksh 1.00 | 8.81% |
| Diamond Trust Bank | Banking | Ksh 63 | Ksh 2.70 | 4.29% |
| Equity Group Holdings | Banking | Ksh 34 | Ksh 2.50 | 7.35% |
| I&M Holdings Ltd | Banking | Ksh 44 | Ksh 2.55 | 5.6% |
| Stanbic Holding Plc | Banking | Ksh 80 | Ksh 5.80 | 7.25% |
| Standard Chartered Bank Ltd | Banking | Ksh 159.25 | Ksh 15 | 9.42% |
| Scangroup Ltd | Commerical & Services | Ksh 6.70 | Ksh 8.00 | 119.4% |
| KenGen Ltd | Energy & Petroleum | Ksh 5.08 | Ksh 0.25 | 4.92% |
| Total Kenta Ltd | Energy & Petroleum | Ksh 24.05 | Ksh 1.30 | 5.41% |
| Umeme Ltd | Energy & Petroleum | Ksh 7.20 | Ksh 41.30 | 573.61% |
| Jubilee Holdings Ltd | Insurance | Ksh 270 | Ksh 8.00 | 2.96% |
| Kenya Re-Insurance Corporation Ltd | Insurance | Ksh 2.27 | Ksh 0.10 | 4.41% |
| Britam Holdings Ltd | Insurance | Ksh 7.76 | Ksh 0.25 | 3.22% |
| Nairobi Stock Exchange | Investment Services | Ksh 8.02 | Ksh 0.80 | 9.98% |
| British American Tobacco (BAT) | Manufacturing & Allied | Ksh 342 | Ksh 30 | 8.77% |
| Fahari I-Reit | Real Estate Investment Trust (REIT) | Ksh 5.50 | Ksh 0.75 | 13.64% |
| Safaricom Plc | Telecommunications & Technology | Ksh 30.50 | Ksh 1.40 | 4.59% |
See also: Is the Stanlib Fahari I-REIT a good investment?
Highest Dividend Paying Stocks
Here is a list of the highest dividend yields of 2020 and a previous year comparison. The safe withdrawal rate for any investment is 4%, thus our lower our cut-off is 4%. Anything above 10% tends to be risky. Therefore, we shall only consider dividend yields that are above 4% but below 10%.
| Stock | 2020 Yield | 2019 Yield | 2018 Yield | 2017 Yield |
| Absa Bank Kenya Plc (ABSA) | 9.57% | 6.74% | – | – |
| British American Tobacco (BAT) | 8.77% | 5.7% | 2.80% | – |
| Cooperative Bank of Kenya Ltd(COOP) | 8.81% | 6.12% | 4.08% | – |
| Diamond Trust Bank Kenya Ltd (DTK) | 4.29% | 2.39% | 1.21% | – |
| Equity Group Holdings (EQTY) | 7.35% | 4.67% | 3.70% | – |
| I&M Holdings Ltd (IMH) | 5.6% | 4.72% | 2.80% | – |
| KenGen Ltd (KEGN) | 4.92% | 4.37% | – | – |
| Kenya Re-Insurance Cooperation Ltd (KNRE) | 4.41% | 13.64% | 4.91% | – |
| Safaricom Plc (SCOM) | 4.59% | 1.97% | – | 3.10% |
| Stanbic Holding Plc (SBIC) | 7.25% | 6.45% | – | – |
| Standard Chartered Bank Ltd (SCBK) | 9.42% | 6.91% | 5.48% | – |
| Total Kenya Ltd (TOTL) | 5.41% | 4.73% | 3.97% | – |
Learn more: Kenya’s Highest Dividend Paying Stocks
Special Considerations
- Dividend investing in the time of COVID-19 needs serious consideration. The current economic climate, company history and performance needs to be considered before committing to any investment decision.
- Mature companies that are settled in their industries tend to regularly pay dividends and offer better dividend yields. Younger or faster-growing companies like Safaricom tend to reinvest their profits for growth instead of paying out dividends.
- There are dangers to high dividend yields. Anything above 10% dividend yield could be a red flag. Common reasons for a high dividend yield are a dramatic decline in stock price or the company is attempting to attract investors with better returns.
- Note that a dividend yield doesn’t provide the full picture of the company. Therefore, take the time to consider stocks payout ratio, dividend history and performance before making any investment decision.
Looking Beyond
With the numbers in mind and the special considerations listed above, it would make more sense to look for companies with a lower and more consistent dividend yield. Look for solid financials and dividend pay rates similar to industry peers.
It is also important to remember that dividend yields do not account for potential changes in future dividend payouts or price fluctuations. During this time of the pandemic, take the time to learn how companies are coping and what changes they are making that might affect their bottom line.
As we hope for this crisis to come to an end, let’s look beyond and make the right moves today. A good number of the stocks mentioned here are seriously undervalued. If you do not already own them, consider investing. Undervalued stocks that pay dividends are always great investments.
Happy Investing!
Image credits: Top by Olya Kobruseva from Pexels
Article Sources:
1. My Stocks. “Corporate Announcements, https://live.mystocks.co.ke/m/calendar.” Accessed on 01st November 2020.
2. Wealth Architects. “Kenya’s Highest Dividend Paying Stocks, https://wealtharchitects.co.ke/blog/2018/04/05/kenyas-highest-dividend-paying-stocks/.”Accessed on 30th November 2020.
3. My Stocks. Price list anad trading summary for Thursday 29st December, 2019, https://live.mystocks.co.ke/price_list/20201029.” Accessed on 30st October, 2020.
4. My Stocks. Price list anad trading summary for Tuesday 31st December, 2019, https://live.mystocks.co.ke/price_list/20191231.” Accessed on 01st November 2020.
Disclaimer: This information is provided to you as a resource for informational purposes only.