Last Updated on 21 November, 2023 by Rational thinking
African dividend stocks are stocks issued by publicly traded companies located in Africa. These stocks usually pay dividends to shareholders, which can be a great way to increase returns from your investment. African dividend stocks may offer investors a way to diversify their portfolios into emerging markets and have the potential to generate higher returns than developed markets. Additionally, certain African dividend stocks may be eligible for tax benefits, such as dividend withholding tax exemptions in some countries. Before investing in African dividend stocks, investors should do their research to ensure the company is financially sound, has a strong dividend history, and pays dividends on a regular basis.
The 10 best African dividend stocks
1. MTN Group Ltd. (JSE:MTN): MTN Group is a leading mobile telecommunications company operating in 21 countries across the Middle East, Africa and Asia. The company’s primary focus is the provision of voice and data services to individuals, businesses and governments. The company has been paying dividends since 2006, and has a current dividend yield of 3.38%.
2. Naspers Ltd. (JSE:NPN): Naspers is a South African media and Internet company with a presence in more than 130 countries. The company operates a number of businesses, including its core media and Internet businesses, as well as the pay-TV business. Naspers has a current dividend yield of 1.94%.
3. Sanlam Ltd. (JSE:SLM): Sanlam is a leading financial services provider in South Africa and other African countries. The company provides a broad range of products, including life assurance, short-term and long-term savings and investments, and other financial services. Sanlam has been paying dividends since 2003, and has a current dividend yield of 4.99%.
4. Standard Bank Group Ltd. (JSE:SBK): Standard Bank is one of the largest banking groups in Africa, with operations in 20 countries. The company provides a range of corporate and investment banking, retail banking, and wealth management services. Standard Bank has a current dividend yield of 4.67%.
5. AECI Ltd. (JSE:AFE): AECI is a leading South African chemical and explosives group with operations in more than 40 countries. The company has a diversified portfolio of products, including explosives, mining chemicals, specialty chemicals and agrochemicals. AECI has been paying dividends since 1990, and has a current dividend yield of 6.25%.
6. Sasol Ltd. (JSE:SOL): Sasol is a leading energy and chemical company with operations in over 30 countries. The company is a leading producer of fuels, petrochemicals, and other chemicals. Sasol has been paying dividends since 1997, and has a current dividend yield of 5.17%.
7. Pick n Pay Stores Ltd. (JSE:PIK): Pick n Pay is a leading South African retailer with a presence in over 21 countries. The company operates supermarkets, convenience stores, and other retail outlets. Pick n Pay has been paying dividends since 2009, and has a current dividend yield of 1.50%.
8. Shoprite Holdings Ltd. (JSE:SHP): Shoprite is a leading South African food retailer with operations in 15 countries across Africa. The company operates a chain of supermarkets and other retail outlets. Shoprite has a current dividend yield of 1.42%.
9. African Rainbow Minerals Ltd. (JSE:ARI): African Rainbow Minerals is a leading South African mining company with operations in a number of African countries. The company produces a wide range of minerals and metals, including copper, nickel, iron ore, and gold. African Rainbow Minerals has a current dividend yield of 5.91%.
10. Barloworld Ltd. (JSE:BAW): Barloworld is a leading South African industrial group with operations in 19 countries. The company operates in the automotive, industrial, and logistics industries, and provides a range of services, including equipment rental, parts, and financial services. Barloworld has a current dividend yield of 3.90%.
Are African dividend stocks a good investment?
African dividend stocks can be a great investment for those looking to diversify their portfolio and access a range of new opportunities. Investing in African dividend stocks provides investors with exposure to both the global and African stock markets, allowing them to benefit from both macro-economic and industry-specific trends.
The African continent has seen tremendous economic growth over the last decade and is projected to continue to experience growth in the coming years. This can be attributed to a number of factors, including improved economic policies, increased foreign direct investment, and increased access to global markets. This economic growth has translated into increased corporate profits, which can be returned to shareholders in the form of dividends.
In addition to higher dividend yields, African dividend stocks offer investors an opportunity to diversify their portfolios, which can help mitigate risk. Since African markets are not as mature as other regions, they often have different economic and political cycles, which can provide investors with a unique opportunity to capitalize on unique opportunities.
Investors should be aware that investing in African dividend stocks involves certain risks, including currency fluctuations, political instability, and the potential for economic volatility. However, with proper due diligence and research, investors can have a better understanding of the potential risks and rewards associated with investing in African dividend stocks.
Overall, African dividend stocks offer investors an opportunity to diversify their portfolios and access new opportunities with potentially higher returns. While there are certain risks associated with investing in African stocks, investors should consider the potential rewards before making any decisions.
How to buy african stocks as a foreigner? Which brokers have African stocks?
As a foreigner looking to buy African stocks, you will need to open an account with an international brokerage firm that allows you to purchase stocks from African exchanges. Depending on the country you are from, there may be restrictions on which firms you can use.
In the United States and Canada, the popular options for trading African stocks are Interactive Brokers, TD Ameritrade and Charles Schwab. All of these brokers offer access to African exchanges, including the Johannesburg Stock Exchange (JSE) in South Africa, the Nigeria Stock Exchange (NSE) in Nigeria, and the Ghana Stock Exchange (GSE) in Ghana.
Interactive Brokers is a popular choice for trading African stocks because it offers a wide range of international markets and the ability to trade via their global trading platform. TD Ameritrade and Charles Schwab also have global trading platforms but their focus tends to be on North American exchanges.
Other international brokers that offer access to African exchanges include Saxo Bank, AvaTrade, and Oanda. Saxo Bank is a popular choice for traders looking for access to international markets, while AvaTrade and Oanda offer trading platforms designed for beginners.
Finally, there are some African-based brokers that offer access to African exchanges. These include Standard Bank Webtrader, Stanbic IBTC, and UBA Africapital. All of these brokers offer access to African exchanges, but the fees and commissions can be higher than those of international brokers.
Before you open an account with any broker, make sure to do your research and compare their fees, commissions, and features. You should also make sure that the broker is regulated and that they are a member of the Financial Services Board (FSB) or other regulatory body in the country you are trading in.
How big are the African stock markets?
The African stock markets vary in size and capitalization, depending on the country. The continent has a total stock market capitalization of about $1.8 trillion USD, as of 2020.
In terms of size and capitalization, the largest stock market in Africa is the Johannesburg Stock Exchange (JSE) in South Africa. It is the largest stock exchange in Africa and the twentieth largest in the world, with a market capitalization of over $1 trillion USD. It is home to the biggest companies in South Africa, including FirstRand, Naspers, and Sasol.
The second largest stock market in Africa is the Nigerian Stock Exchange (NSE) in Nigeria. It has a market capitalization of about $41 billion USD and is the second largest stock exchange in Sub-Saharan Africa and the third largest in Africa. It is home to some of the largest companies in Nigeria, such as Dangote, Zenith Bank, and Guaranty Trust Bank.
The third largest stock market in Africa is the Egyptian Exchange (EGX) in Egypt. It has a market capitalization of about $28 billion USD and is the largest of the Arab exchanges, with a large number of listed companies from different sectors. It is home to some of the largest companies in the Middle East and North Africa, such as the Commercial International Bank and the Orascom Group.
Other African stock markets that are worth mentioning include the Bourse de Casablanca in Morocco, the Bourse Régionale des Valeurs Mobilières in West Africa, and the Bourse de Tunis in Tunisia. These exchanges have a combined market capitalization of around $40 billion USD. There are also several smaller exchanges in Africa, such as the Nairobi Stock Exchange in Kenya, the Stock Exchange of Mauritius, and the Stock Exchange of Seychelles.
Overall, the African stock markets are an important source of capital for companies in the region, and are helping to drive the economic development of the continent.
African dividend stocks vs American dividend stocks?
When comparing African dividend stocks to American dividend stocks, there are several key differences to consider.
First, the level of risk associated with each type of stock should be taken into account. Generally, African dividend stocks carry a higher degree of risk than American dividend stocks. This is due to the fact that African markets are more volatile and often less regulated than their American counterparts. Additionally, African companies often have less access to capital and can therefore be more heavily impacted by economic factors.
Second, the nature of the dividends should be considered. American stocks are typically dividend-paying stocks, meaning that the company pays out a portion of its earnings to shareholders. African stocks, on the other hand, are often non-dividend paying stocks, meaning that the company does not pay out any portion of its earnings to shareholders.
Third, the liquidity of the stocks should be taken into account. American stocks tend to be more liquid than African stocks, making them easier to trade. This is because American companies have access to a larger pool of investors, which increases the liquidity of the stocks.
Finally, the tax implications of investing in each type of stock should be considered. Generally, American dividends are taxed at lower rates than African dividends. This is due to the fact that American dividends are often subject to preferential tax treatments, such as the qualified dividend income tax rate.
In conclusion, when comparing African dividend stocks to American dividend stocks, investors should consider the level of risk associated with each type of stock, the nature of the dividends, the liquidity of the stocks, and the tax implications of investing in each type of stock.
What is the average dividend yield historically in Africa?
The average dividend yield of stocks on the African continent has historically been relatively low compared to other regions. Based on data from the MSCI World Index, the average dividend yield for African stocks over the past decade has been around 1.5%. This compares to 3.2% for global stocks and 4.3% for developed markets.
However, the average dividend yield in Africa has been trending upwards in recent years. According to a report from Refinitiv, the dividend yield on African stocks rose to 2.1% in 2018, its highest point since 2013. This was largely due to a combination of higher dividend payouts and a collapse in stock prices in the region.
In addition, dividend yields vary significantly across different parts of the continent. For example, dividend yields are generally higher in North African countries such as Egypt, where the average yield is around 4.7%. Meanwhile, South African stocks have a much lower yield of around 1.3%.
Overall, the average dividend yield from African stocks is lower than other regions around the world, but has been slowly rising over the past few years. The yield varies significantly across different parts of the continent, so investors should pay close attention to local markets when considering investing in Africa.
What is the average p/e ratio for stocks in Africa?
The average price-to-earnings (P/E) ratio for stocks in Africa is difficult to determine due to the fragmented nature of the African stock markets. The few major exchanges in Africa are the Johannesburg Stock Exchange (JSE) in South Africa, the Egyptian Exchange (EGX) in Egypt, and the Nigerian Stock Exchange (NSE) in Nigeria.
Based on data from the World Federation of Exchanges, the average P/E ratio across Africa was 18.9 in 2018. This average was driven largely by the Johannesburg Stock Exchange, which had a P/E ratio of 19.3 in 2018. The other major exchanges in Africa had P/E ratios ranging from 12.6 in Nigeria to 23.7 in Egypt.
In addition to the major exchanges, there are numerous smaller exchanges operating in Africa. These exchanges tend to have higher P/E ratios than the major exchanges, and can range from 20 to 40 or higher.
Overall, the average P/E ratio for stocks in Africa is difficult to determine due to the variety of exchanges operating in the region. However, based on data from the World Federation of Exchanges, the average P/E ratio across Africa was 18.9 in 2018.
Generally speaking, African stocks are not considered to be particularly shareholder friendly. This is due to a number of factors, including high levels of corruption, weak corporate governance standards, and inadequate disclosure requirements.
Corruption is a major problem in many African countries, and can have a direct impact on how stock markets operate. Companies may be able to manipulate their finances and performance in order to benefit insiders, while minority shareholders are often left out of decision-making processes. This can make it difficult for shareholders to hold companies accountable and to ensure that their investments are being managed in the best interests of all stakeholders.
Furthermore, many African countries have weak corporate governance standards, which can make it difficult for shareholders to have a say in how companies are managed and how their investments are being used. This can lead to a lack of transparency and accountability within the system, making it difficult for shareholders to protect their interests.
Finally, many African countries have inadequate disclosure requirements, meaning that companies are not required to disclose important information to shareholders on a regular basis. This can make it difficult for shareholders to make informed decisions about their investments and can lead to a lack of trust between companies and their shareholders.
Overall, African stocks are generally not considered to be particularly shareholder friendly. The presence of corruption, weak corporate governance standards, and inadequate disclosure requirements make it difficult for shareholders to protect their interests and to ensure that their investments are being managed in the best interests of all stakeholders.
What are the best value stocks in Africa?
The best value stocks in Africa vary from country to country and depend on a variety of factors such as the country’s economy, the sector the stock is in, the company’s performance, and the management team. To make an informed decision, it’s important to do your own research and pay attention to stock analysts’ ratings.
In South Africa, some of the best value stocks include Naspers, a media and internet company; African Rainbow Minerals, a diversified mining company; and MTN Group, a telecommunication giant. All three of these stocks have outperformed the Johannesburg Stock Exchange (JSE) over the past five years.
In Nigeria, some of the best value stocks include Dangote Cement, a cement manufacturing company; Nigerian Breweries, a beverage manufacturing company; and Zenith Bank, one of the most profitable banks in the country. All three of these stocks have outperformed the Nigerian Stock Exchange (NSE) over the past five years.
In Kenya, some of the best value stocks include Safaricom, a telecommunication giant; Kenya Power, an electricity distribution company; and East African Breweries, a beverage manufacturing company. All three of these stocks have outperformed the Nairobi Securities Exchange (NSE) over the past five years.
In Uganda, some of the best value stocks include Umeme, an electricity distribution company; Stanbic Bank, one of the most profitable banks in the country; and Centenary Bank, a commercial bank. All three of these stocks have outperformed the Uganda Securities Exchange (USE) over the past five years.
In Tanzania, some of the best value stocks include CRDB Bank, a commercial bank; TANESCO, an electricity distribution company; and Tanzania Breweries, a beverage manufacturing company. All three of these stocks have outperformed the Dar es Salaam Stock Exchange (DSE) over the past five years.
In short, the best value stocks in Africa vary depending on the country, sector, and company performance. It’s important to do your own research and pay attention to stock analysts’ ratings before investing.
The historical return of African stocks vs African dividend stocks?
The historical return of African stocks vs African dividend stocks is an important comparison for investors considering investing in either type of security. African stocks typically refer to equities that are traded on African exchanges, such as the Johannesburg Stock Exchange, the Nigerian Stock Exchange, or the Egyptian Exchange. African dividend stocks, on the other hand, refer to stocks that pay a dividend to shareholders on a regular basis.
When looking at the historical return of African stocks, the trend has been generally positive. From 2002 to 2017, the Johannesburg Stock Exchange All Share Index, which tracks the performance of all shares listed on the JSE, has increased by over 300%. Similarly, the Nigerian Stock Exchange All Share Index has increased by over 400% since 2002. This trend is also reflected in other African exchanges.
The trend for African dividend stocks has been slightly more muted than for regular African stocks. This is due to the fact that dividend stocks tend to be more stable than regular stocks and thus their performance is not as volatile. In addition, dividends are paid out to shareholders, which reduces the stock’s return.
However, dividend stocks still offer investors a solid return. The JSE Dividend Plus Index, which tracks the performance of dividend stocks listed on the JSE, has increased by over 250% since 2002. Similarly, the Nigerian Stock Exchange Dividend Plus Index has increased by over 200% since 2002.
Overall, African stocks have provided investors with a solid return over the past decade and a half. However, dividend stocks have not performed as well, due to the fact that dividend payments are not as volatile as regular stock prices. Nevertheless, dividend stocks still offer investors a solid return, making them an attractive option for those looking for a more stable return.
Which one is the biggest stock market in Africa?
The Johannesburg Stock Exchange (JSE) is the largest stock exchange in Africa. It is located in Johannesburg, South Africa, and was founded in 1887. The JSE is one of the 20 largest stock exchanges in the world by market capitalization, and it has more than 400 listed companies. It is the largest stock exchange in Africa by market capitalization and it is the largest in terms of the number of listed companies. The JSE has been the leader in the African market since its inception and it is the only exchange in the continent that is listed on the World Federation of Exchanges.
The JSE offers a wide range of products such as equities, derivatives, bonds and ETFs. It also offers a variety of services such as market research, portfolio management, online trading, and more. Additionally, the JSE is a member of the World Federation of Exchanges and the African Exchange Association.
The JSE is a leader in the African financial market and it is the largest stock exchange in the continent. It provides a platform for investors to buy and sell shares, bonds, derivatives and other financial instruments. The JSE is also the most liquid stock exchange in Africa, providing investors with an efficient and cost-effective way to invest in the African markets.
What is the biggest risk when investing in stock in Africa?
The biggest risk when investing in stock in Africa is the potential for political and economic instability. Political instability can be caused by a variety of factors, including civil unrest, coups, political and social unrest, and regional conflicts. These types of events can have a significant impact on the stock market, as investors become fearful of investing in a region with a high risk of instability.
In addition, economic instability can also have an impact on stock prices, as economic downturns can cause stock prices to drop. This is especially true in countries with weak economic systems and high levels of poverty, as these economic issues can cause investors to become wary of investing in a region. Additionally, economic uncertainty can cause investors to not invest due to the fear of losses, resulting in a decrease in stock prices.
Finally, corruption is a major risk when investing in stock in Africa. Corrupt politicians can divert funds from public companies, resulting in a decrease in stock prices. Additionally, investors may be wary of investing in companies with connections to corrupt officials, as this could lead to problems in the future.
Overall, investing in stock in Africa is a risky venture, as there is potential for political and economic instability, as well as potential for corruption. Investing in Africa should only be done with proper research and understanding of the potential risks involved.
The worst African stock market when it comes to risk and performance?
The worst African stock market when it comes to risk and performance is likely to be the Nigerian Stock Exchange (NSE). The NSE is the second largest stock exchange in Africa, yet its performance has lagged behind many of its peers.
The Nigerian economy has been in a state of flux for the past few years, with a large influx of foreign capital and a large current account deficit. This has caused the currency to depreciate and inflation to rise, resulting in a lack of investor confidence and a decline in stock prices. Additionally, the political instability in the country has weighed heavily on the performance of the NSE, as investors are hesitant to invest in an economy that is so unpredictable.
The NSE is also subject to high levels of volatility and risk due to its reliance on oil exports. As the largest contributor to the country’s GDP, any fluctuations in the price of oil will have a direct and immediate impact on the performance of the NSE. Furthermore, the lack of liquidity in the market makes it difficult for investors to enter and exit positions quickly and at a reasonable cost.
Finally, the lack of a well-developed financial infrastructure and the lack of transparency in the market makes it difficult for investors to make informed decisions. This has resulted in a lack of investor confidence, resulting in a lack of trading volume and low liquidity.
Overall, the Nigerian Stock Exchange is a risky investment due to its reliance on oil and political instability, its lack of liquidity, and its poor financial infrastructure. Investors should proceed with caution when investing in the NSE.
Pros and cons of buying African dividend stocks?
Pros:
1. Potential for Above-Average Returns: One of the primary benefits of investing in African dividend stocks is that they can potentially offer higher returns than other investments. The African economy is still growing and has a lot of potential for growth, and dividend stocks in Africa can offer investors the potential for above-average returns over the long-term.
2. Diversification: Investing in African dividend stocks can also provide investors with increased diversification. This can be beneficial for investors who are looking to spread their risk across different asset classes and regions. Moreover, investing in different African countries can provide investors with further diversification, as different countries may experience different economic and political conditions that can affect the performance of their stock markets.
3. Low Volatility: African dividend stocks tend to be less volatile than other stock markets, which can provide investors with a less risky investment option. This can be beneficial for investors who prefer a more conservative approach to investing.
Cons:
1. Political and Economic Uncertainty: The main disadvantage of investing in African dividend stocks is the risk of political and economic uncertainty. Many African countries are still developing and lack the stability of more developed nations, which can make it difficult to predict the future performance of their stock markets.
2. Currency Risk: Investing in African dividend stocks also carries currency risk. The value of a country’s currency can fluctuate significantly, which can affect the value of investments in that country’s stock market.
3. Limited Liquidity: African dividend stocks tend to have relatively low liquidity, which can make it difficult to buy and sell these stocks quickly. This can make it difficult to take advantage of short-term market trends and can also affect the ability of investors to exit their investments quickly if needed.
The most famous African stock market investor?
The most famous African stock market investor is undoubtedly Nigerian billionaire Aliko Dangote. Aliko Dangote is the founder and chairman of the Dangote Group, a multi-billion dollar conglomerate with activities ranging from cement production to food processing. He is the richest man in Africa and the 23rd richest in the world.
Dangote’s wealth is largely attributed to his savvy investments in the stock market. He started investing in the Nigerian stock market in the late 1980s and has since become one of the most successful investors in the country. He has invested in a wide range of industries, including oil and gas, banking, manufacturing, real estate, and telecommunications.
Dangote is an advocate for investing in the African stock market, encouraging investors to look beyond traditional investments in the US and Europe. He encourages investors to look at African markets for long-term growth opportunities and to diversify their portfolios.
Dangote’s success in the stock market has been a source of inspiration for many aspiring African investors. He has become a role model for many, showing them that it is possible to become wealthy through stock market investments. He has also become a symbol of success in the African business community, showing that African entrepreneurs can become successful in the global economy.
FAQ:
– Why consider investing in African dividend stocks?
Investing in African dividend stocks offers the potential for increased returns, diversification into emerging markets, and, in some cases, tax benefits. These stocks can be a way to capitalize on the economic growth seen in Africa over recent years.
– Can foreign investors buy African dividend stocks?
Yes, foreign investors can buy African stocks. To do so, open an account with an international brokerage firm that provides access to African exchanges, such as the Johannesburg Stock Exchange or the Nigerian Stock Exchange.
– What are the risks associated with investing in African dividend stocks?
Investing in African dividend stocks involves risks such as currency fluctuations, political instability, and potential economic volatility. Proper due diligence and research are crucial to understanding and mitigating these risks.