With the index first approaching the 3000 mark, my stock picking focus is now on dividend yield.

For my long term portfolio, i am focusing on stocks that assure me at least a 10% Dividend Yield at prevailing prices. My focus therefore is now on the following stocks:

1. Kenol Kobil - At Ksh 9.30, and with management having assured investors of at least USD 35M net profit (EPS of 2.15 at 45% dividend payment policy) with a dividend of about Ksh 1, this represents 10.75%. Am hoping for a price dip below Ksh 9.00 to undertake massive purchases although am already buying at prevailing prices.

2. KCB - At a projected dividend of Ksh 1.50 for 2011, the price of Ksh 15 represents a 10% dividend yield. Am buying at price dips below Ksh 15.

3. Williamson Tea - Having paid Ksh 15 dividend last year on an EPS of Ksh 97, the company made 91% of this money in 1st Half 2011 alone. Am projecting an EPS of Ksh 135 - 140 for the full year. The company is awash with cash and can comfortably give Ksh 25 - 30 as dividends for 2011. I'll be buying at any price below Ksh 250.

As prices continue to dip, my 10% principle brings more companies into focus.

Happy Hunting.

@Master of Stocks...Good strategy. What do you think of Mumias?

I think mumias is in my priority list...if its gets lower and with a dividend of .50c...I think its a good deal...in terms of dividend yield.

I think i understand the conservative thinking of the Williamson Directors and Management (majority of whom are British). The risk of giving an outsized dividend is on sustainability.They wouldn't want to give a dividend of Ksh 15 only to give Ksh 5 the next year.
In effect, their futuristic approach is to accumulate 'excess profits' as revenue reserves for issuing as dividends in years of scarcity. This ensures some dividend payment even when the company makes a loss (unpredictability of rain fed agriculture).

However, the effect of three successive years of EPS in the Ksh 100 region has created oversized revenue reserves that should now support a > Ksh 15 dividend for the next at least 5 years.

I may be wrong, but i have a feeling that last years Ksh 15 dividend established a new baseline in dividend payment for this company.

Happy Hunting.

Knowing the directors I think with an EPS of 140 the 15bob dividend will be maintained with a special dividend of 10-15 included...

@stockmaster. If I'm based in Uganda and I want to enjoy these dividend yields, what can I do to make sure my return is not eroded by currency movements?

Not going to be here for long mate and don't know how long these rates will stay. Besides Tbills are boring. Nway I'm sure there's some solution banks can offer to prevent me from any exposure. Ta very much.

My stock picking strategy for 2012 seems to be working with Williamson announcing an Interim Dividend of Ksh 50.

In the next 4 months (End of year March 2012 Results), they should be announcing a second dividend which should be in the range of Ksh 15 - 20.

I feel like a farmer about to receive his tea bonus having bought a sizeable chunk at Ksh 186.

Happy Hunting.

They have pleasantly surprised me.

The Director's had little option.....even after giving an Interim Dividend of Ksh 50, they still have over Ksh 400 per share as cash reserves. If the end of year returns an EPS of Ksh 130 - 140 as i estimate it should, then a second dividend of Ksh 20 could be in the horizon.

This is one share that i will not sell even at Ksh 500 (Net Asset Value is Ksh 549.50).

Happy Hunting