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Johannesburg - Dividend yields declined significantly this year as company earnings were hit by the global downturn - but some firms managed to buck the trend.
South African equities' dividend yield dropped from about 5% in January to 3.2% by August 2009.
Dividend yield is dividend payments divided by a company's share price - shareholders' return on their investment. A decrease in the dividend amount, or increase in the share price, will drive the dividend yield down.
Declining dividend yields have been "most pronounced in resource shares, where things have been going from feast to famine in a very short space of time", according to Coronation Fund Managers analyst Louis Stassen.
Resources giant Anglo American had to cut its dividend this year for the first time in about 60 years.
Stassen said highly geared companies and those that did not generate a lot of cash had to cut dividends substantially, or had to come to the market with equity issuance to strengthen their balance sheets.
"One would expect those companies to pay off debt for the next year or two, rather than have liberal dividend policies," said Stassen.
However, a lower dividend yield is not undiluted bad news, as it could mean share prices are up and companies have done well.
According to Stassen, defensive industries such as food retailers tend to hold up better in a challenging environment, because the nature of their business allow them to remain cash-flush.
Shoprite, for example, increased its total dividend by 29% from 155 cents per ordinary share last year to 200 cents this year.
Likewise, Naspers upped its dividend from 180c/share in 2008 to 207 cents this year - its dividend yield moved from 1.06% to 1.16%.
Stocks with high dividend yields as at October 14 2009 are:
- Alliance Mining Corporation (18.6%)
- Spanjaard (17.95%)
- Intertrading (15.38%)
- IQuad Group (11.28%)
- Hospitality Property Fund B (10.68%)
- Insimbi Refractory & Alloy (10%)
- Makalani Holdings (9.92%)
- Brait (9.43%)
- Fairvest Property Holdings (9%)
- Hospitality Property Fund A (8.97%).
- Fin24.com