Safaricom cuts interim dividend for second straight year
TLDR
- Safaricom, a top Kenyan telecom company, announces reduced interim dividend of Sh0.55 per share, totaling Sh23.03 billion for FY ending March 2024.
- Despite a 2.1% net profit increase to Sh34.2 billion in H1 2023, Safaricom opts for lower dividend payout than the previous financial year.
- Investors may examine Safaricom's strategic priorities and financial management reasons for the dividend reduction.
Safaricom, a leading telecommunications company in Kenya, has announced an interim dividend of Sh0.55 per share, totaling Sh23.03 billion ($158 million) for the financial year ending March 2024. This marks the second consecutive year that Safaricom has reduced its dividend payout to investors.
The interim dividend amount represents a decrease from the previous financial year's interim payout of Sh0.58 per share, which amounted to Sh23.24 billion. Despite Safaricom's net profit growing by 2.1% to Sh34.2 billion for the half-year ended September 2023, the company has opted to reduce its dividend payout.
This decision may reflect Safaricom's strategic priorities, capital allocation considerations, or other factors influencing its financial management approach. Investors will likely scrutinize the company's financial performance and dividend policy to understand the rationale behind the reduction in dividend payout.
Key Takeaways
Dividends are important in stock investing because they give shareholders a steady source of extra money. Large corporations that make a lot of money and have stable finances usually pay significant dividends. Investing in these companies can benefit in two ways: your shares can become more valuable over time, and you get regular dividend payouts. It appears that Safaricom has been adjusting its dividend policy over the past few years, starting with the introduction of interim dividends in 2021. Initially, the interim dividend was Sh0.45 per share, amounting to Sh18.03 billion. This was later raised to Sh0.64 per share, totaling Sh25.64 billion in 2021. However, Safaricom has since begun reducing its dividend payout, both for interim and final dividends. The telco has been cutting the interim dividend, coinciding with a decline in the final dividend as well. For instance, the final dividend per share decreased from Sh0.92 in 2021 to Sh0.75 and Sh0.62 in 2022 and 2023, respectively.
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