Zimbabwe Stock Exchange listed entity, Econet Wireless Zimbabwe, this week declared a first quarter dividend pay-out for the financial year ended February 28, 2019.
The telecoms company announced a dividend of 0,772 US cents per share for the first quarter ended 31 May 2018.
Econet has been paying quarterly dividends since the 2018 financial year. The total dividends declared for the whole of FY2018 amounted to $60 million, equivalent to 2,3562 US cents per share.
In the last quarter of the year ended 28 February 2018, the company paid a final dividend of 0,3927 US cents per share amounting to $ 10 million.
In the third quarter it had paid a dividend of 0,9379 US cents per share. Prior to this, Econet had declared a dividend of 0,386 cents per share amounting to $10 million for the first quarter ended May 31, 2017.
This was followed by another payout at the release of its results for the half year to August 31, 2017, where it declared a further dividend of 0,579 cents per share.
The past year and a half has seen cash rich Zimbabwe Stock Exchange listed companies going out of their way and even outside their normal dividend policies to pay out increased dividends.
One such company is Delta Corporation, which paid a dividend of 7,20 cents per share for the year ended 31 March 2018, which is 99,7 percent of its earnings per share of 7,22 cents. The previous year, the company had paid a 96 percent dividend pay-out.
In the last year or so, the market has seen Delta paying what it termed special dividends which are paid on top of the normal dividends.
An analyst with a local asset management company said companies were resorting to increased dividend pay-outs in order to utilise their huge cash piles which they are struggling to deploy into the productive sector.
“Given the current foreign currency situation, paying handsome dividends is the only way to utilise the cash pile.
“At the moment, it’s not easy for companies that rely heavily on imported equipment to deploy the cash on capex because there is simply no foreign currency for such investment.”
“What we can tell from the market at the moment is the fact that companies that have the potential to be the major growth drivers for the economy are finding it hard to find better alternatives for their spare cash than to pay dividends.
“Sadly, the current economic environment does not allow businesses to redeploy profits as access to foreign currency has become a major albatross.”
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.