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Enacy Mapakame-Business Reporter
Some resilient listed firms have maintained their strong dividend policies despite the Covid-19 induced difficulties experienced in 2020 on global economies and performance.
Experts say paying out dividends sends out a strong message about the company’s performance, future prospects and its financial muscle.
Several companies that have released full year or half year results for the period to December 2020 have rewarded their shareholders by declaring full year or interim dividends.
From manufacturing, to banking sector to hospitality sector, companies have recorded mixed performances with others recording good earnings performance and sharing the profits made during one of the most difficult and unprecedented years.
The usual big cap counters with strong dividend policies and cash generating capacity Innscor, National Foods, Axis, Simbisa have been consistent in rewarding their shareholders.
Diversified hospitality group, Meikles has also declared a second interim dividend of 42,5 cents per share for the year ended March 31, 2021.
Construction firm, Masimba Holdings rewarded its shareholders with a 41,80 cents dividend for the year to December 31, 2020 after the group reported a good earnings performance on the back of a strong order book that prevailed throughout the year.
A strong and consistent dividend policy is one of the factors potential investors consider before they pump their monies into a counter.
According to Investopedia, investors also see a dividend payment as a sign of a company’s strength and a sign that management has positive expectations for future earnings, which again makes the stock more attractive. A greater demand for a company’s stock will increase its price.
Although yet to release financials for the year to February 2021, telecoms giant, Econet has already announced a reward to shareholders of a 40 cents dividend a share for the year to February 28, 2021.
While other firms performed well during the year, others felt the heat.
For Padenga, the crocodile breeder has warned of a significant fall in profitability for the year to December 31, 2020 relative to prior year due to the negative effects of the Covid-19.
The pandemic caused supply chain disruptions due to movement restrictions and had an adverse impact on sale of crocodile skins to its key markets in Europe.
Under such cases, companies may have difficulties to declare a dividend while others will opt to preserve capital to invest in expansion projects or to meet their debt obligations.
At First Capital Bank (FCB) which did not declare a dividend for the year to December 31, 2020, chairman Patrick Devenish said: “The board considered a number of factors to arrive at a dividend decision. These include the risks inherent in the market that could impact the bank’s performance and envisaged growth in the future.
“After consideration of the above factors the board does not propose a dividend for the year under review.”
Online Reporter