eBusiness Weekly
Once a company declares a profit, it is faced with two choices either to give it back to the owners of the company or to reinvest it back into the business.
Finance theory will tell you that it really doesn’t matter which choice is taken, although proponents of the “Bird in Hand Theory” prefer to get the dividends. The theory goes on to say that a bird in hand is better than 2 in the bush, meaning its better to have dividends now than to reinvest in the business and benefit from capital gains.
Although most companies try to make a balance of how much to retain versus to disburse, this article is focused on those listed firms that gave out significantly to their owners in Zimbabwe in 2022.
To rank these counters, we will use dividend yield, using the closing share price on the dividend declaration date.
All dividends that were issued in a currency that is different from the share price’s currency will be converted using a blended exchange rate.
Since companies have different fiscal years, we will only consider dividends declared in the calendar year 2022.
- ZB Financial Holdings Limited
The financial powerhouse, which has kept its shareholders on alert for some time now, on the possibility of major transaction which might alter its operations managed to declare a $1,45 dividend during the year.
The dividend translated to a yield of 2,042 percent, which is way better than most companies in the manufacturing sector, but below its peers in the financial services sector.
On the other hand, the bank ended up finishing the year with a 47 percent YTD change which was below annual inflation which closed above 243 percent.
- NMB Limited
It was refreshing to see the bank announcing a dividend in 2022 for the first time since 2019, as the company was battling to remain capital compliant.
The $0,45 dividend, which translated to a yield of 2,65 percent was enough to cheer the shareholders up, especially considering what a terrible year it was on the market. The company’s share price appreciation however, was more meaningful as the bank was amongst the best performing counters throughout the year and closing off with a 368 percent YTD gain.
- Axia Corporation
The retail giant with interests in furniture, distribution and car spare parts amongst others, held its own and continued on its consistent dividend paying streak despite a challenging financial year.
The Innscor offspring managed to make 2 dividends payments during the calendar year with a total yield of 2,90 percent.
The counter during the first half of the year was in the top 3 best performing stocks, giving shareholders an added advantage. It however, regressed in the second half after the structural changes that were made to the Zimbabwean capital markets.
- Caledonia Mining Corporation
The gold producing company, and parent to Blanket Mine had a good run with increased gold production and selling prices. Unlike most counters which are listed purely as equities, Caledonia is listed as a Depository Receipt.
This however, is by means an excuse for the illiquid nature of the counter. Nevertheless, the company made US$0,14 quarterly dividends and yielded a 3,21 percent and this was the return given that the counter barely moved.
- National Foods Limited
Despite being a thinly traded counter, most market participants are excited by the fundamentals of this consumer goods stock.
Its high share price, galvanizes from volatility brought by chancers in the form of retail investors. This will even become more as the counter moved to the less active Victoria Falls Stock Exchange (VFEX).
During the calendar year, the company issued 2 sets of dividends in different currency which altogether yielded just under 4 percent.
5.Delta Corporation
It comes as no surprise that one of the biggest and most liquid company made it to the list.
A real bellwether, now in its maturity having given birth to companies like OK Zimbabwe and African Sun amongst others.
Delta issued a hybrid dividend in both currencies and highlighted to analysts that the bigger chuck of its sales is in the greenback.
After converting all the dividends, it yielded 4,38 percent. The share price however, only moved 121 percent during the year.
- Innscor Africa Limited
Another blue-chip stock, with a consistent dividend paying policy and strong cashflows also made it to the list. Although the history of the company can only be tracked back to the 80s, it has done a tremendous amount of work in creating value for its shareholders and has spun off other entities along the way.
In 2022, the diversified conglomerate declared and paid 2 dividends with a total yield of 4,48 percent whilst on the other hand the share price moved 340 percent. The company has also highlighted its intention to migrate to the VFEX this 2023.
- OK Zimbabwe Limited
The Fast-Moving Consumer Good (FMCG) giant has a consistent dividend paying policy and has only skipped one year since the country dollarised in 2009.
The company’s former chief executive officer once explained that its shareholders usually need to remain liquid to meet their obligations hence the consistent payout.
OK Zimbabwe also had a hybrid dividend payout this year in both currencies and paid its shareholders twice.
After converting and adding everything received by shareholders, it yielded 5,70 percent. However, concern is expressed mainly by market participants on the share price movement of the counter as it has failed to surpass its targets.
- FBC Holdings Limited
Another financial powerhouse with operations in insurance, banking and microlending amongst others decided to continue distributing part of its earnings to its owners after a somewhat above average financial year.
FBC made two dividend payouts of $1,4882 each resulting in a total dividend yield of 6,43 percent.
Shareholders in the company will confirm that the company has been consistent of late in distributing dividends.
In the HY22 Chairman’s report, FBC confirmed that it has distributed $1billion translating to a 22X dividend cover.
- First Capital Bank
The Mauritanian owned bank has sort of hit the road running after taking over Barclays Bank in a number of African markets.
Not only is it consistent in paying back its shareholders, but it also gives a meaningful dividend as evidenced by the total yield of over 11 percent.
This is despite the challenges faced by most banks, of fighting to maintain the core capital requirements as the local currency lost over 70 percent of its value in 2022.
The bank made 2 dividend payments during the calendar year and also had an impressive share price appreciation with a YTD gain change of over 350 percent.
According to the data I gathered, in 2022 alone over 25 companies paid a dividend to shareholders, with Dairiboard also declaring but later on reversing before the payment was made.
Perhaps it is worth highlighting that, shareholders of the above listed companies might not even be as excited as the readers due to the long time between the dividend declaration and payment dates.
The raging inflation would have already destroyed the value by the time the money hits your bank account.
