SUMMARY: In this article we are going to attempt to find the highest dividend yielding shares on the JSE with the best track record of continuously increasing dividends.
In a VIEWS article in 2018 "JSE’s best dividend payers" we meticulously spelt out why dividend shares, and more particularly, consistent dividend growing stocks, outperformed their peers and the indices they belong to. We won’t be getting into that detail for now, but we urge you to go and read that article to understand why we are looking at the shares we are discussing now.
The universe of JSE shares that are consistently increasing dividends has been shrinking in the JSE bear-market that commenced in mid-2014. We have just over 25% of the JSE that have managed to increase dividends over the last year and less than 17% of the JSE has managed to increase dividends for at least the last two years running.
Remember, these are very strict criteria. To qualify for each year of increasing dividends, your last final-to-final dividend payout must have increased in addition to your last interim-to-interim dividend, meaning we inspect your last 4 sets of financial results to come to a determination for each year as shown below:
This particular category of share is displaying something very special, especially in light of the recent recession we are about to emerge from.
We are going to be focusing our attentions on those JSE shares that are not property funds or REITS and that have managed to increase their dividends for at least the last two consecutive years. There are only 45 of these shares out of a universe of 400 JSE shares!
We are then going to use this subset of special shares and rank them in the following two ways:
- Their current dividend yield (1 = highest yield, 45 = lowest)
- How many uninterrupted years they have increased dividends (1= 18 years, 30 = 2 years)
We then combine the two ranks calculated above to get a TOTAL rank and re-sort the list from lowest to highest number.
This gives us the shares with the best combination of highest dividend yields and longest (consistent) uninterrupted dividend growth.
We display the TOP-20 rankings from the total of 45 qualifying shares below:
|JSE SHARE (Provided by Sharenet Analytics)||DY||DC||DYR||DCR||TOT|
|MONDI PLC PRE||5.4||9||9||5||14|
|NEDBANK GROUP LTD||5.2||9||11||5||16|
|NU-WORLD HOLDINGS LTD||7.5||6||4||15||19|
|THE FOSCHINI GROUP LTD||4.4||8||18||9||27|
|A E C I LTD||5.1||6||12||15||27|
|ABSA GROUP LTD||6.3||5||7||21||28|
|AFROCENTRIC INV CORP LTD||7.1||4||5||25||30|
|ISA HOLDINGS LTD||9.3||3||2||28||30|
|MERAFE RESOURCES LTD||12.1||2||1||30||31|
|STANDARD BANK GROUP LTD||5||5||13||21||34|
|ADAPTIT HOLDINGS LTD||3.4||7||24||12||36|
|COMPAGNIE FIN RICHEMONT||2.8||9||32||5||37|
DY = current dividend yield | DC = yrs uninterrupted growth | DYR = yield rank | DCR = consistency rank
Its interesting to note that everyone of these shares bar CFR, currently has a dividend yield greater than that of the All-Share Index, namely 3.35%
CLIENTELE is ranked 1st as it’s at the top of the list with a total score of 7, which is derived from its ranking as the 4th most consistent dividend payer (10 years uninterrupted dividend growth) and the 3rd highest dividend yield (7.9%). Although MERAFE is ranked 1st for its dividend yield of 12.1%, its ranked 30 for consistency as it only continuously increased dividends for the last 2 years, resulting in a total rank of 1+30=31 or number 16 on the list.
When looking for dividend shares you want both consistency and highest yield possible and this methodology adequately captures both requirements for you. Of course, this does not mean you must not further inspect these shares for other issues and fundamentals, or ignore the macro environment we are in. And while its less likely a share with a longer track record of increasing dividends will skip or decrease a dividend, it’s not impossible. But it’s a great starting list.
Dwaine van Vuuren
RecessionAlert, Sharenet Analytics
Dwaine van Vuuren is a full-time trader, global investor and stock-market researcher. His passion for numbers and keen research & analytic ability has helped grow RecessionALERT.com (US based) and PowerStocks Research (now Sharenet Analytics) into companies used by thousands of hedge funds, brokerage firms, financial advisers and private investors around the world. An enthusiastic educator, he will have you trading and investing with confidence & discipline.