The record payout was hugely supported by Safaricom and banks’ dividends. FILE PHOTO | NMG Listed blue chip firms that make the Nairobi Securities Exchange 20-Share Index have shrugged off a tough business environment and economic uncertainty due to the coronavirus pandemic to pay shareholders more than Sh102.9 billion in dividends
Their latest payouts represent an increase of 8.6 percent on the Sh94.8 billion the companies paid in 2018, signalling that their boards and managements are confident they have adequate cash to navigate the crisis.
The record payout was hugely supported by Safaricom and banks’ dividends, which helped ease the blow to shareholders who have lost tens of billions in share price erosion at the Nairobi bourse.
The giant telco and the lenders account for than 75 percent of the market value of NSE, which has shed Sh395.97 billion since the start of the year as foreign investors withdrew amid turmoil in global markets in the wake of the pandemic.
Restrictions imposed to curb the spread of the virus like nationwide dusk-to-dawn curfew and ban on public gatherings has hit consumer spending, and subsequently company sales and profits.
It was expected that companies would cut or cancel dividends in the race to preserve cash during the coronavirus crisis, which hit Kenya in mid-March when firms prepared to announce their financial reports and declare dividends.
Kenya has 465 confirmed cases of coronavirus and 24 deaths with effects of the infectious disease leading to forecasts that the economy could contract one percent in the worst case scenario.
A few companies that are part of the benchmark NSE index such as NCBA Group and Nation Media Group offered bonus shares and suspended cash distributions to shareholders, citing the need to preserve money.
Those leading in cash distributions are traditionally the most profitable companies, able to make the payouts and still add to their multi-billion-shilling cash reserves built over the years.
This has put them in a pole position to weather shocks, especially the economic fallout triggered by the spread of the coronavirus.
Others see the raising of dividends as the optimal use of cash in an environment where making big investments are not likely to yield adequate returns in the short term.A few firms like Safaricom, on the other hand, are expected to go through the Covid-19 pandemic little scathed and may even benefit from increased demand for their services.The telco declared a dividend of Sh1.4 per share or a total of […]
