Econet To Pay Out A Dividend Of $20 Million; Possibly Excess Cash And No Forex Contributing To The Decision


Charles Banda, Econet Secretary says

Econet has declared a dividend of 0.77 cents per share amounting to $20 million for the first quarter ended 31 May 2018.The dividend will be paid out on 7 August and will be levied a 10% withholding tax Companies in Zimbabwe. The shares will trade cum-dividend till July 31 while the shares will trade ex-dividend to August 1, 2018.The record date has been set for August 3 Payments to foreign shareholders will be subject to exchange control approval and payment guidelines. Foreign shareholders should appoint or make their own arrangements with a local bank of their choice to receive dividend on their behalf and to facilitate remittance to the Local Econet shareholders can receive their dividents through Ecocash.

So the dividend keeps going up….

The dividend was 0.467c per share summing up to 12.1 million for the year (2016-2017) in February 2017. And Econet declared a dividend of $50 million in November 2017. It’s interesting that the dividend keeps increasing. The pay out for one quarter is almost double the pay out for one year 2 years ago.


Wonder why..

Maybe Econet has just been making more money. Econet more than tripled profits last year. The more you have the more you give right?

Or maybe its something else

Maybe because of lack of foreign currency companies cannot make any advancements that require foreign currency and are therefore paying out instead of just sitting on tonnes of cash (well not really cash but you get what I mean).

Ebusiness weekly believes

The increased dividend pay-outs speak to the fact that companies are admitting that they no longer believe they can make use of the cash they are generating, besides paying dividends.

Lemons into lemonade

If indeed there is a problem of excess cash which can’t be deployed meaningfully because of the forex situation then Econet is being prudent in declaring a dividend. Regular pay outs of dividends are good for the share price in the long term. Investors love a company that rewards and investor demand keeps the share price in the green.

So if I invest my money now won’t I get good returns?

Right now Econet’s share price is $1.18 per share and if it goes on at this rate one will have no less than 3c per share earnings at the end of the year  (it may be much much more) for $1.18. Not bad… Maybe there is some good in this foreign currency  shortage. Not good for foreign investors who will find it difficult to get their money but maybe it’s a chance for the locals to benefit. Especialy now when we don’t know what currency we will be using tomorrow it maybe good to store your money as shares somewhere.



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