If you assumed that Africa’s capital markets were merely a growth story without significant dividends for investors, we would like to correct this assumption. Consider the companies listed on the BRVM, the stock exchange for French-speaking countries in West Africa. Nestlé Côte d’Ivoire (ISIN: CI0000000295) offers a net dividend of FCFA 856.80 per share (EUR 1.31). This corresponds to a dividend yield of 18.6%. Senegalese telecom operator Sonatel SN (ISIN: SN0000000019) pays FCFA 1400 (EUR 2.58) per share, which amounts to a yield of 11.1%. Several banks and telecom operators listed on the BVRM in Abidjan also offer yields well above 10%. Why are we taking the BVRM as an example? Because the companies there are quoted in Franc CFA (FCFA or XAF), and that currency has a fixed conversion rate of EUR 1 = FCFA 655.96. Investors, therefore, are not exposed to currency risk if they invest in stocks on the BVRM.
You will also find appealing dividend stocks on other African bourses. Take those on the Johannesburg Stock Exchange (JSE) as another example: Coronation Fund Managers (ISIN: ZAE000047353) offers a dividend yield of 11.4%. Moreover, the mining companies Sibanye Stillwater (ISIN: ZAE000259701) and Impala Platinum (ISIN: ZAE000083648) offer yields of about 8.8%.
Even some funds offer dividend yields. The US-based Commonwealth Africa Fund, for example, has a dividend yield of 1.8%. Not much but better than nothing. African funds are, in any case, not a dividend bet but one that is on capital growth. Despite the very bearish markets of 2022, the Commonwealth Africa Fund is up an impressive 3.6% since January and 22% for the last 12 months.
Households all over the world are experiencing shortages of cooking oil since Russia’s invasion of the Ukraine. In Germany, supermarkets have been forced to ration vegetable oil to one bottle per customer. This dearth of supply should benefit vegetable oil producers greatly, and indeed, prices on their shares are skyrocketing. Let’s look at Palmci (ISIN: CI0000000592), a producer of palm oil from the Ivory Coast. Just this year, Palmci’s share price is up 61.3% to FCFA 11,275 (EUR 17.19). In the past three years, the share price has soared by 802%. A big reason for Palmci’s surge is its strong results. The company announced last week record net profit of FCFA 42 billion. This should very much please African entrepreneur Pierre Billon, who, via a holding company known as Sifca, has a 52.5% controlling stake in Palmci.
Shares in Nigerian competitor Okomu Oil Palm Company (ISIN: NGOKOMUOIL00) are also performing well on Lagos’ stock exchange. However, the stock is clearly lagging behind that of Palmci. Okomu’s share price is up 3.5% since January. This is not so bad given the bearish markets of late, but clearly less impressive than Palmci’s performance.
Incidentally, palm oil has a bad reputation among environmental lobbyists. Wrongly so, in our opinion. It is a nutritious, healthy and inexpensive vegetable oil. As such, it is suited to enriching the menu of populations in emerging countries. While it is very problematic when tropical forests are cleared to make room for palm oil farming, this is actually forbidden in the Ivory Coast. In Nigeria, the potential for palm oil plantations is enormous as many of them are currently idle.
Kenyan media group Nation Media (ISIN: KE0000000380) is not only outperforming its peers in Africa but also those internationally. Its share price was up 10.5% in April and 19.8% since January. US media giant News Corp (ISIN: US65249B2088), by contrast, lost 8.5% since the beginning of 2022, while the share for the New York Times (ISIN: US6501111073) has dropped 17.4% and that of French Media group Reworld Media (ISIN: FR0010820274) fell 12.1%.
Nation Media has been buoyed by strong results. Last week, it announced that net profit in 2021 increased tenfold to KES 493 million (EUR 4 million) from KES 47.9 million in 2020. Revenues rose 12 percent year on year to KES 7.6 billion due to strong sales and advertising.
The company’s digitilisaation strategy seems to be paying off. The company is reducing its dependency on paper-based content in favour of delivering it digitally. Nation Media is 44.66% owned by the Imam of the religious community Nizari Ismailis, Aga Khan IV.
Commodity stocks are the stocks to invest in right now in Africa. For example, Moroccan mining company Managem (ISIN: MA0000011058) is up 37% to MAD 2151 (EUR 204.24) since the beginning of the year. Indeed, Managem has outperformed many of its peers in Africa. To compare: BHP Group (ISIN: AU000000BHP4) is up just 10.9% since January; Glencore (ISIN: JE00B4T3BW64) by 27.9%; Rio Tinto (ISIN: GB0007188757) by 16%; and Anglo American (ISIN: GB00B1XZS820) by 16.3%.
Managem is in the business of extracting raw materials including copper, zinc, lead, cobalt and fluorine as well as the precious metals gold and silver. The company also produces cobalt cathodes, zinc oxide, copper and nickel sulfate as well as arsenic trioxide. Morocco’s royal family owns 80.3% stake of Managem through a holding company named Al Mada.
Since its founding in 1930, Managem has expanded to African countries such as Guinea, Niger, Burkina Faso, Gabon and the DR Congo. In this way, Managem allows its investors not only to participate in the current rally in commodities, but also in the overall African growth story.