Safaricom and listed banks are increasingly becoming the backbone of dividend income at the Nairobi Securities Exchange (NSE), accounting for 80.2% of the Sh245.9 billion paid to shareholders in the latest financial year. The concentration highlights a market where investors seeking predictable cash returns are relying heavily on a relatively small group of profitable blue-chip companies.
The 12 listed banks and Safaricom collectively distributed Sh197.2 billion, leaving the other 21 dividend-paying companies with just Sh48.7 billion. This means the banks and Safaricom paid more than four times the dividends distributed by the rest of the listed companies combined. Safaricom alone accounted for Sh80 billion, equivalent to about 32.5% of all dividends paid at the NSE during the period.
Safaricom’s payout is particularly notable because it represents a 66.7% increase from the Sh48.08 billion distributed in the previous financial year. The dividend per share similarly rose from Sh1.20 to Sh2.00, also a 66.7% increase. The final dividend increased by 76.9%, from Sh0.65 to Sh1.15 per share, while the interim dividend rose by 54.5%, from Sh0.55 to Sh0.85.
The increase was underpinned by a substantial improvement in profitability. Safaricom’s net profit rose by 37.2% to Sh95.6 billion, supported by stronger M-Pesa earnings and reduced losses from its Ethiopian operation. The company therefore had greater capacity to return cash to shareholders while maintaining its investment agenda.
The banking sector is following a similar trajectory, although the performance is uneven across individual institutions. KCB, for example, increased its interim dividend from Sh2 to Sh3 per share, a 50% rise, after reporting a 14.2% increase in first-half net profit. NCBA raised its interim dividend from Sh2.50 to Sh3.75, representing a 50% increase, while Absa more than doubled its dividend from Sh0.20 to Sh0.50 per share, a 150% increase. Stanbic, however, moved in the opposite direction, cutting its interim dividend from Sh3.80 to Sh1.64, a 56.8% decline.
The wider market is also benefiting from this concentration of profitable companies. NSE market capitalisation has risen by 42% or Sh1.23 trillion to Sh4.18 trillion this year, with Safaricom and the banking sector contributing Sh916 billion, equivalent to 74% of the total increase. This suggests that dividend strength and capital appreciation are reinforcing each other: companies with strong earnings attract investors seeking income, while increased demand pushes their share prices higher.
However, the growing dominance of Safaricom and banks also raises a broader question about the depth of Kenya’s equity market. When four out of every five shillings paid in dividends comes from one sector and one telecoms company, investors may have limited alternatives for reliable income. This concentration could make the NSE more vulnerable to sector-specific shocks while rewarding companies with strong cash-generating businesses.
There is also an important economic dimension. A significant share of these companies is foreign-owned, meaning part of the dividend income generated in Kenya ultimately leaves the country. Vodacom’s increased stake in Safaricom to 55%, for instance, strengthens foreign ownership of the country’s largest dividend payer. Similarly, foreign investors continue to hold substantial positions in major banks.
The dividend surge therefore tells two stories at once: Kenyan blue-chip companies are generating stronger shareholder returns, but the NSE remains heavily dependent on a narrow group of firms to deliver those returns. For investors, the attraction is clear income, profitability and capital gains. For the market, however, the longer-term challenge is whether more listed companies can develop the earnings capacity needed to broaden the dividend base.
