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Top dividend stocks on the JSE

A detailed look at the top 10, with some surprising names among the top 25…
Picture: Moneyweb

An analysis of the highest dividend-paying stocks on the JSE shows that three of the top ten are resources companies, three are large caps, a few are small caps, while only one is in the top 40. The list excludes preference shares, listed property counters as well as companies with a market capitalisation of less than R500 million.

It is critical to consider the sustainability of dividends, especially among resource companies and smaller caps. One would need to do homework to understand historical dividend flow (over a longer period than just one year) as well as whether specific dividend policies are in place; it is not as simple as blindly buying those shares with high dividend yields. Dividend withholding tax (increased from 15% to 20% in February) also needs to be taken into account. Data is sourced from Profile Data, available on Moneyweb’s Company Stats tool here.

Grand Parade Investments

Dividend yield: 14.04%

Share price (21 July 2017): R2.85

Date of last dividend: November 25 2016

Most recent dividends: 25c (FY16 final) + 15c (FY16 interim)

Over the last few years, Grand Parade has transformed from a company holding minority (empowerment) stakes in Sun International casinos in the Western Cape and Kwa-Zulu Natal to one focused primarily on the food sector, via its growing Burger King chain (and now Dunkin’ Donuts/Baskin-Robbins) as well as a sizeable stake in Spur Corporation.

DRDGold

Dividend yield: 12.41%

Share price (July 21 2017): R4.03

Date of last dividend: August 30 2016

Most recent dividends: 12c (FY16 final) + 38c (FY16 Q3)

Notably, DRDGold did not declare a dividend at the interim stage in FY2017 (it did so in the previous financial year). Despite it declaring a loss for the first-half, its cash position had improved relative to the corresponding period in FY2016. The arguably ‘special’ dividend declared in the third quarter last year is the chief reason why the company’s dividend yield is so high. Without this, it would be closer to 6%.

Sibanye

Dividend yield: 9.46%

Share price (July 21 2017): R15.32

Date of last dividend: February 23 2017

Most recent dividends: 60c (FY16 final) + 85c (FY16 interim)

Sibanye says its “dividend policy is to return at least 25% to 35% of normalised earnings to shareholders and after due consideration of future requirements the dividend may be increased beyond these levels”.

The $2.2 billion Stillwater Mining acquisition, announced in December, utilised a rights issue to fund part of the transaction. This has obviously impacted the share price which has resulted in an abnormally high dividend yield. At the end of FY16, Sibanye said the 145c in total dividends represented a “dividend yield of 5%”, which one could term ‘normalised’.

MMI Holdings

Dividend yield: 7.48%

Share price (July 21 2017): R21.00

Date of last dividend: March 2 2017

Most recent dividends: 65c (FY17 interim) + 92c (FY16 final)

MMI Holdings held its interim dividend at 65c per share, despite a decrease in diluted core headline earnings per share. The final ordinary dividend in the prior year was 92c, resulting in a total dividend of 157c per share, which MMI says was a “slight increase” on FY2015. The insurer’s share price has been under pressure for some time – it was largely flat in 2016 and is down over 10% over the past year (and year-to-date) – and as dividends have been maintained, the yield has increased.

Metrofile

Dividend yield: 7.36%

Share price (July 21 2017): R4.35

Date of last dividend: March 6 2017

Most recent dividends: 13c (FY17 interim) + 19c (FY16 final)

Metrofile has been a solid dividend payer over recent years. At its most recent results (interims), the company said the “board has targeted maintaining debt levels at least at 1.5 times Ebitda. However, continued strong cash generation has resulted in leverage remaining below this level. At the end of the previous financial year, the board resolved to reduce dividend cover from a target of 1.5 times to a target range of 1.25 to 1.5 times and until the minimum debt levels were achieved, the board resolved to pay dividends with cover below the target range. The interim dividend cover for the period has accordingly been increased by 18.2% to 13.0 cents per share representing cover of 1.3 times”.

Barclays Africa Group

Dividend yield: 7.02%

Share price (July 21 2017): R146.70

Date of last dividend: February 23 2017

Most recent dividends: 570c (FY16 final) + 460c (FY16 interim)

Barclays Africa Group in the only member of the top 40 among the ten highest-ranking shares by dividend yield. MTN Group and Nedbank Group are in the top 25. The group’s share price is slightly lower over the past year, unsurprising given the exit of former parent Barclays Plc which would’ve almost certainly caused some downward pressure.

Total dividends declared in FY2016 were 1030c, an increase on the 1 000c in FY2015. In its annual results, the group said “declaring a 3% higher DPS of 1 030 cents on a dividend cover of 1.7 times took cognizance of the challenging operating environment, the Group’s strong capital position, internal capital generation, strategy and growth plans”.

It added that it continues to “expect that our dividend cover is likely to increase slightly in the medium term”.

Combined Motor Holdings

Dividend yield: 7.01%

Share price (July 21 2017): R22.10

Date of last dividend: April 19 2017

Most recent dividends: 100c (FY17 final) + 55c (FY16 Q3)

This motor vehicle retailer notes in its most recent results, that the past five years has seen “compound growth in dividends per share of 27%”. CEO Jebb McIntosh believes “that this track record places the Group alongside some of the best counters on the JSE”. The group adds that “the level of national new vehicle sales has shown steady decline” over this same period. In FY17, dividends for the year were up 26%.

Novus Holdings

Dividend yield: 7.00%

Share price (July 21 2017): R8.00

Date of last dividend: June 9 2017

Most recent dividends: 56c (FY17 final)

The final gross dividend per share declared by this printing group unbundled from Media24 was 20% lower than the previous year. The group noted that the year was “challenging”. Cash and cash equivalents at the end of the year decreased by nearly R40 million (to R227 million), versus a R15 million decline between FY15 and FY16.

Pan African Resources

Dividend yield: 6.54%

Share price (July 21 2017): R2.36

Date of last dividend: September 21 2016

Most recent dividends: 15.438c (FY16 final)

The gold miner paid its largest ever dividend (totaling R300 million) in the last financial year, on the back of “record gold production and profits”.

At the time, it also revisited its dividend policy, “to provide the market with more certainty on future payments and to ensure that our dividend is sustainable”.

It detailed this policy as follows: “Pan African Resources aspires to pay a regular dividend to shareholders. In balancing this cash return to shareholders with the group’s strategy of generic and acquisitive growth, it believes that a target pay-out ratio of 40% of net cash generated from operating activities, after allowing for the cash flow impact of sustaining capital, contractual debt repayments and also the cash flow impact of once-off items, is appropriate. This measure aligns dividend distributions with the cash generation potential of the business”.

Telkom

Dividend yield: 6.49%

Share price (July 21 2017): R65.00

Date of last dividend: June 5 2017

Most recent dividends: 291c (FY17 final) + 131c (FY17 interim)

Telkom increased its annual dividend in FY17 by 56.3% to 422c per share. The group amended its dividend policy during the year “to an annual dividend of 60% of headline earnings with an interim dividend of 40% of interim headline earnings”.

Notably, cash balances have declined in recent years, from R3.6 billion at the start of FY16, to R2.5 billion at year-end (/the start of FY17), to R1.5 billion as at March 31 2017.

   

Market cap

Fwd PE

PE

DY

EPS

1

GRANPRADE 

 R1 350 297 273

0

365.38

14.04

0.78

2

DRDGOLD 

 R1 738 661 961

3.14

52.34

12.41

7.7

3

SIBANYE 

 R32 567 931 275

7.66

5.67

9.46

270.19

4

MMI HLDGS 

 R33 082 795 641

11.24

19.66

7.48

106.82

5

METROFILE 

 R1 892 860 166

10.64

13.99

7.36

31.09

6

B-AFRICA 

 R124 365 024 609

7.88

8.29

7.02

1769.6

7

CMH 

 R1 653 124 156

7.24

7.78

7.01

284.06

8

NOVUS 

 R2 778 659 632

0

7.22

7

110.8

9

PAN-AF 

 R5 273 862 587

5.46

6.92

6.54

34.1

10

TELKOM 

 R34 251 665 370

10.31

9.01

6.49

721.42

11

CORONAT 

 R23 754 857 017

14.99

15.48

6.45

438.7

12

LEWIS 

 R3 047 397 344

9.11

7.81

6.4

400.13

13

VALUE 

 R708 424 416

0

6.14

6.32

61.89

14

CLIENTELE 

 R5 344 054 064

10.75

12.35

6.25

129.55

15

BOWCALF 

 R534 507 059

8.01

8.25

6.18

73.94

16

REUNERT

 R13 749 779 342

0

13

5.98

573.85

17

LIB-HOLD

 R33 391 230 858

8.47

14.37

5.92

811.9

18

AFORBES

 R9 161 946 157

9.94

12.79

5.86

53.4

19

AME

 R482 545 440

8.04

9.89

5.83

606.67

20

TRUWTHS

 R34 264 027 117

11.86

11.83

5.83

655.2

21

ANCHOR

 R1 086 536 568

6.87

9.39

5.72

59.53

22

CAXTON

 R4 846 068 885

9.22

10.06

5.71

121.77

23

MTNGROUP

 R234 252 416 315

18.77

-161.45

5.63

-77

24

NEDBANK

 R106 226 707 000

8.68

8.89

5.63

2398.88

25

HOLDSPORT

 R2 696 888 750

10.32

13.74

5.6

454.88

 

* Hilton Tarrant works at immedia. He can still be contacted at hilton@moneyweb.co.za.

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COMMENTS   3

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Emphasis on ‘sustainability’ within the intro.. One should be cognizant of track record and liquidity – for instance only 5 of the 25 stocks listed here namely: MMI, Lewis, Truworths, MTN & Nedbank pass the liquidity and quality filters laid down by the S&PDJI Dividend Aristocrats index for the local market. This index tracks shares that have maintained and/or grown their dividends over the last 7 years rather than focusing on yield alone.

Regards
Gareth (CoreShares)

Hello, How can I buy shares here

Grand Parade information not strictly correct, although I would say it is a good value share and one of my biggest holdings. However, the 15c dividend relates to 2015, it was delayed though and only paid in 2016. so the dividend should really be based on 25c, not 40c.
Also, would not be so sure of a dividend this year at all unless it is paid of of capital reserves.

End of comments.

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