Standard Chartered Bank Kenya's dividend yield rose to 17 percent, as most banks' share prices fell after closing the final dividend books.
Dividend yield shows the rate of cash return by comparing dividends against the current share price, with declining share prices benefiting income-focused investors in companies that maintain or raise their payouts.
Standard Chartered's share price fell 12.8 per cent to Sh170.25 as of Thursday, from Sh195.25 on April 19, when the bank's books were closed to pay the final dividend of Sh23 per share – which is due to hit investors' accounts. On May 30th.
The company had previously distributed an interim dividend of 6 shillings per share, bringing its total dividend to 29 shillings per share.
Banking sector stocks saw a significant rise in the run-up to book closing dates, as investors moved to lock in the dividends declared in the last year of operations until December 2023.
However, bank share prices fell in the wake of the books closing, with investors already locking in the expected dividends. Companies use the book closing date to determine the final date to determine which investors will receive dividends for the period.
The share price of other dividend-paying banking stocks has followed the same path, having passed the book closing date which are also described as non-dividend stocks.
For example, I&M Group's share price fell 15.4% to Sh18.35 from a high of Sh21.7 on April 18 when it closed its books to pay a final dividend of Sh2.55 per share. This brought I&M's dividend yield to 13.8 percent.
Likewise, Cooperative Bank of Kenya's dividend yield jumped to 12.5 per cent with its share price falling 14.5 per cent to Sh12, from a high of Sh14.05 on April 29 when it closed its book to pay a final dividend of Sh12. 1.5 shillings per share.
NCBA Group and Absa Bank Kenya's dividend yields also improved to 11.1 and 12.6 percent, respectively, after closing their books on April 30 with shares trading at Sh42.75 and Sh12.30 on Thursday.
DTB, Equity Group and Stanbic Holdings, which currently have yields of 12 percent, 9.38 percent and 12.6 percent respectively, will close their books for their final dividends on May 24 (for DTB and the shares) and May 17 (Stanbic).
The three shares were trading at Sh50, Sh42.6 and Sh121.75 respectively on Thursday. Dividend yield usually reports the potential return to an investor who buys a stock while keeping the yield, or dividend, per share constant.
The financial ratio is usually crucial for investors looking for dividend yields in the stock market.
Nine out of the 11 listed banking companies declared dividends to investors for the period ending December 2023 with the only exception being HF Group and KCB Group.
The dividend yield ratio has an inverse relationship to the stock price, as a lower stock price will result in a higher dividend yield when keeping dividends per share constant. This means that investors will often achieve a higher dividend yield when stock prices are low than vice versa.
