...the "Dollar Billionaire " as I put it earlier
Some of us threw gun powder into my eyes. Pesa imeundwa..mingiii!!!!

You have said it yourself!!!!

Ati pesa Imeundwa wapi ? . It is just like the Gova econimc growth , the peasant never seems to notice

One of the truest, simplest gestures of a faithful management and a healthy company, Is a DIVIDEND. For eg. Uchumi now struggling to pay a dividend. We cant trust a management like Jesus that they are using our money wisely. The dividend confirms that there is still a company left at the very least.

And to add who plants a fruit tree that will never bear fruit ?.

Berkshire Hathaway. No dividend.
Olympia Capital. 10 cents dividend.

KQ used to pay a dividend too.
As did Uchumi even post-Rights.
Mumias did too.

Here is my take [much better explained by Warren Buffett among others]

Buffett's advice is this. If you want income from Berkshire, simply sell a small portion of your stock holdings every year. By doing so, you can put cash in your account when you need it.

Read more: http://www.nasdaq.com/ar...-cm262834#ixzz3dhcTNLu5

1) Look at the portfolio holistically not in terms of number of shares but value
2) Determine how much Dividend Yield* you want. In KE, it ranges from 2-5% for most firms so let's take 5% [on the higher end].
3) Sell down 5% of your stake's value annually. This would be the same as a 5% dividend. The sales may be staggered to get an average realization.
4) As long as Centum [or any firm] continues growing its profits [& the price increases by +5%] you will be OK.

Let's use numbers:

10,000 Centum at 50 = 500,000/-
5% Dividend Yield = 500,000 x 5% = 25,000/-
Sell 500 Centum at 50 = 25,000/-
Next year, you need Centum at 52.63 (just north of 5%]
52.63 x (10,000-500) = 500,000

If Centum was to rise to 60/- then 9,500 x 60 = 570,000
You only need to sell 475 shares at 60 to get 5% Dividend Yield.

If Centum were to fall to 45/- then you need to sell more than 500 shares.

If Centum cannot make at least 12% [post-tax] on the retained earnings then you should demand a dividend & put the cash into a IFB. I believe Warren Buffett's goal is a long-term average of 15% ROE.

An alternate is for Centum to issue 1:10 bonuses very 2 years which you can sell for the 5% per year 'dividend' though sales do have costs for the shareholders.


* Williamson Tea is at an astonishing 10% this year [40/- on a share price of 400/- after the announcement]. Pre-announcement 12%. In 2015-16, if rains hold up, tea prices remain high & a weak KES = great cash profits in 2015-16. Is another mega dividend possible?

DTB pays 2% but have great Capital Gains over the past few years.
I&M paid 2.5% [less than 30% payout] but isn't likely to ask for a Rights Issue until 2017. The profits are growing nicely & adding to the NAV.
BAT has a 100% dividend payout [DPS/EPS] since it is a cash machine that can easily finance expansion through profits & loans.

http://www.morningstar.c...eocenter.aspx?id=638300

http://www.forbes.com/si...ever-tax-free-dividend/ [Not possible in Kenya]

Investor presentation that was being done when announcing full year results

Centum is run by very young, bright, bold and ambitious people BUT i am afraid even they might bite more than they can swallow.

There was a time that Centum was 30% of my portfolio (Average purchase 14-17, offloaded 35-40). At any price above 50, i wouldn't have more than 20% in my portfolio.