The shares of Williamson Tea and Kapchorua Tea registered double-digit gains at the stock market on Thursday after the two firms announced enhanced dividends for the financial year ended March 2023, sparking demand for the units.
Williamson Tea closed the day 11.9 percent higher at Sh232 per share, while Kapchorua Tea gained 10.2 percent to close at Sh173 per share.
Both were trading without the usual 10 percent daily share movement cap due to the material (results) announcement.
Kapchorua Tea raised its dividend by two-and-a-half times to Sh25 per share, from Sh10 in the previous year, after reporting a 47 percent jump in net profit to Sh314.5 million in the period.
Williamson Tea, whose profit rose by 4.5 percent to Sh564.3 million, raised its payout to Sh30 per share from last year’s distribution of Sh20 per share.
The two tea firms, which share majority owners, said in separate results filings that they had benefitted from improved tea prices in the global market in the reporting period.
“The good results are a consequence of significant hard work from staff and the right quality of the tea that is made for the target markets which fetched good prices during the financial year,” said Kapchorua Tea.
The enhanced dividend yields on the stocks following the results announcements saw investors seek to take positions on the counters before the expected price jump, but the thin liquidity of the tightly held stocks meant that less than 10,000 units changed hands on both companies.
Ahead of trading on Thursday, Kapchorua Tea had a dividend yield (trailing) of 6.4 percent, based on last year’s dividend and Tuesday’s closing price of Sh157 per share.
This yield, however, jumped to 14.5 per cent at the close of trading on Thursday (based on the new dividend), a rate that comfortably beats the 11.9 percent on offer on the government’s one-year Treasury bill.
Williamson Tea’s dividend yield also jumped significantly, from 9.6 percent to 12.9 percent following the enhanced dividend.
Investors in the Nairobi Securities Market (NSE) have become keener on dividends in recent years due to limited capital gains on a majority of stocks at the bourse, especially on companies whose yields are beating inflation.
Just over half –33 out of 65— listed companies at the NSE have paid a dividend in the last year, raising the premium further for those that offer regular payouts among investors.
Kapchorua Tea’s 14.5 percent dividend yield now sees it jump ahead of Standard Chartered Bank Kenya (13.7 percent) and I&M Bank (13.2 percent), and is now only behind cross-listed Umeme (15.3 percent) on the list of top yielding counters at the NSE.
