(NAIROBI, KENYA) – Quickmart’s planned listing on the Nairobi Securities Exchange (NSE) will bring dividends back to the bourse’s commercial and services segment, widening options for income seeking investors.
The supermarket chain said it will pay at least 80% of net profit as dividends after listing, joining a small group of firms that return more than three quarters of earnings to owners.
Full year dividend data shows Safaricom, Standard Chartered Bank Kenya, BAT Kenya, NSE, TotalEnergies Marketing Kenya, Williamson Tea Kenya, Kapchorua Tea and Kakuzi are the most generous listed firms, with payout ratios of between 81% and 453% in their latest financial year.
“Following the listing, the company intends to adopt a dividend policy targeting a payout ratio of at least 80 percent of annual profit after tax, to be declared and paid semi-annually, subject to the availability of distributable reserves, the capital requirements of the company (including its growth and investment plans) and other relevant considerations,” Quickmart said in a notice of its intention to list.
“The company expects to distribute approximately KES 2 billion ($15.46 million / GBP 11.64 million) and KES 2.5 billion ($19.32 million / GBP 14.55 million) in dividends in the 2026 and 2027 financial years respectively, representing dividend payout ratios of 95.1 percent and 90 percent.”
Quickmart is expected to launch its public offer by the end of this month, when current owners will sell two billion shares, equal to 50% of its four billion issued shares.
The sellers have also included a green shoe option for an extra 7.5% stake in case of oversubscription, which if fully taken up would raise the sale to 57.5%.
The retailer’s entry, with its dividend policy, will help revive the commercial and services segment, where TPS Eastern Africa was the only company to pay a dividend last year out of 13 listings.
Commercial and services is the largest NSE segment by number of listed companies, ahead of banking with 12 firms and manufacturing and allied with nine.
It has however lagged in dividend returns because of difficult operating conditions affecting its stocks, seven of which posted net losses in the latest financial year, and which also include suspended Deacons East Africa.
In other segments, 11 of the 12 listed banks paid a dividend last year, as did four manufacturing firms. Four of six listed insurers also made a payout, while half of the six listed agriculture firms also paid. Dividends from listed companies have become an important source of liquidity for households and businesses in an economy still facing costly credit and flat pay.
On the NSE, 33 companies paid KES 245.9 billion ($1.90 billion / GBP 1.43 billion) in dividends in their latest financial years, but banks and Safaricom together accounted for 80%, or KES 197.2 billion ($1.52 billion / GBP 1.15 billion), of the total paid to investors.
The other 21 companies that paid dividends distributed a combined KES 48.7 billion ($376.58 million / GBP 283.46 million), just over half of the KES 80 billion ($618.53 million / GBP 465.66 million) paid by Safaricom alone. This points to limited choice beyond banks and the telecoms firm for investors seeking dividends.
Beyond the reliance on a few firms, greater foreign ownership of large banks and Safaricom means a bigger share of dividends leaves the local economy.
In June, South Africa’s Vodacom Group raised its hold on Safaricom by buying an extra 20% stake from the Kenyan government and the UK’s Vodafone Group for KES 272 billion ($2.10 billion / GBP 1.58 billion), taking its controlling stake to 55%.
South Africa’s Nedbank is buying a 66% stake in NCBA for about KES 110 billion ($850.48 million / GBP 640.28 million) in a deal expected to close early in the fourth quarter of the year.
Fellow South African lender Absa Group has also raised its stake in Absa Bank Kenya from 68.5% to 72% at a cost of KES 6.5 billion ($50.26 million / GBP 37.83 million) through a tender offer priced at KES 34.50 per share.