StanChart returns rise to 14.5pc on dividend review

Standard Chartered Kenya #ticker:SCBK shareholders will enjoy a total return of 14.5 percent following the review of dividend for the year ending December 2019 to a bonus share issue and reduced cash payout.

The lender last week said it will ask shareholders to approve the new dividend of Sh7.50 a share plus a bonus issue of one share for every 10 held, replacing the earlier declaration of a Sh15 per share straight cash dividend.

Stanchart cited a need to maintain a strong capital ratio amid the uncertainty of the Covid-19 crisis.

Analysts at investment bank Genghis Capital said the new arrangement works out to a return of 14.5 percent for the year, calculated at present prices.

The payments are for shareholders who were on the lender’s register by April 27.

“The review of 2019 dividend from Sh15 to Sh7.50 plus a 1:10 bonus gives investors a yield of 4.5 per cent on the cash dividend plus 10 per cent stock dividend (before price dilution by the bonus shares),” said Genghis in its weekly report.

“While investors were counting on the cash dividend…this translates to a return of 14.5 percent, significantly better than the 8.9 percent cash dividend yield as previously recommended.”

The bonus issue will see shareholders get a total of 34.35 million new shares, valued at Sh5.71 billion.

The Sh7.50 dividend will give them another Sh2.58 billion in cash payout.

The previous dividend of Sh15 was worth Sh5.15 billion in total payments.

Several banks have decided to alter dividend payments for the 2019 financial year to protect capital positions and support lending as the negative economic effects of the Covid crisis continue to manifest.

NCBA #ticker:NCBA cancelled its earlier dividend declaration of Sh1.50 per share (Sh2.2 billion) and replaced it with a bonus share of one for every 10 held.

Equity Group #ticker:EQTY also cancelled its proposed dividend payout of Sh2.50 per share or Sh9.5 billion dividend payout to its shareholders.