Kenya: Falling share prices raise banks dividend return

The drop in share prices has lifted the dividend yield on bank stocks to a range of between 5.4% and 14.7%, enhancing returns for income-focused investors.

The average dividend yield on Standard Chartered Bank Kenya, Absa Bank Kenya, KCB, I&M, Equity, Co-op Bank, DTB, NCBA, and Stanbic Holdings now stands at 9.08%.

This is slightly below the interest rate on the one-year Treasury bill which came in at 9.77% in the latest auction.

Besides dividends, bank investors also stand to benefit from capital gains in the long term.

The cash returns on bank stocks are based on the total dividend payouts they have announced for the year ended December and their stock’s closing prices on Thursday.

The general stock market sell-off has intensified after most of the listed banks closed their books for dividends.

Most of the banks raised their dividends after posting strong earnings growth in the year ended December, marking a recovery from the slump in the prior year when coronavirus-related defaults and provisions ate into their bottom line.

StanChart has the highest yield at 14.7%, beating the rate on the majority of government bonds. The bank lifted its payout to Sh19 per share and its stock price had declined to Sh128.5 on Thursday.

StanChart, which has the most generous dividend policy, says it intends to maintain its tradition of distributing any excess capital to shareholders.

NCBA’s cash return is at 11.5% based on the lender’s enhanced payout of Sh3 per share and its latest share price of Sh26. Absa has an 11% yield after reinstating dividends of Sh1.1 per share. Its stock had dropped to Sh9.98 on Thursday.

Stanbic’s dividend return stands at 8.55% after the bank lifted its payout to Sh9 per share. Its stock last traded at Sh105.25 and is one of the few gainers on the NSE in the past six months.