Having been in existence for more than 120 years, the Johannesburg Stock Exchange is the largest exchange of its kind in Africa and one of the top platforms worldwide for stock trading.
As with all top exchanges, there are a number of indices associated with the JSE, the most significant being the JSE Top 40, which tracks the performance of the 40 biggest companies on the exchange and which can serve as a good indication of the strength of the South African economy. But whether you want to invest in JSE Top 40 companies or you are looking for a wider range of stocks, one thing that all investors have to consider is the payment of dividends.
Understanding dividends
A dividend is a payment made to all shareholders on a per-share basis. It is essentially a distribution of the company’s earnings to the shareholders and is often made on a quarterly basis, though the payment of a dividend is not guaranteed.
The level of the dividend is decided by the company’s board of directors and is paid out to anyone who owned shares at the ex-dividend date. When buying shares, investors are typically hoping that their stock will rise in value, but they are also interested in the dividend that the company offers. Generally speaking, the better the company’s performance, the greater the dividend, which likely goes hand-in-hand with a rise in the share price, though not always.
Some companies are better at turning revenue into profit than their rivals, but what investors want to know is how much of that profit will eventually be turned into dividends, and in the turbulent economic circumstances that we face going into 2023, dividend payments are a reliable and sought-after return. So which companies in the JSE pay the biggest dividends?
Major dividend payers in the JSE
The most common way to measure dividend payouts is to use the dividend yield statistic. This tells us what proportion of a company’s share price is paid out in dividends each year. While it would be possible to do an amount of money per share comparison, this is less useful to the investor since it doesn’t allow for proper comparisons between companies and dividends.
The level of dividend yield can change as the market changes and it is always important to ensure that you have the latest information. However, as we head into 2023, these are the top five dividend payers on the JSE:
Thungela Resources
The top two dividend payers in the JSE are both involved in energy and basic resources, which is no surprise, given the strength of the mining sector in South Africa.
Thungela Resources is a South African-based exporter of thermal coal to Asia, India, Africa and the Middle East, and has extensive interests in coal mines and processing facilities across South Africa. It tops the list with a dividend yield of over 27%.
Merafe Resources
One of several successful mining companies in South Africa, Merafe Resources is involved mainly in the mining of chrome and the processing of chrome ore into ferrochrome. It operates 22 ferrochrome smelters across South Africa, along with six chrome ore mines. With a dividend yield of over 25%, it is one of the strongest of the so-called ‘dividend stocks’ on the JSE.
Accelerate Property Fund
The third of the JSE stocks that offers a dividend yield of more than 20%, Accelerate Property Fund is a real estate investment group that facilitates investment in a variety of property sectors. Its portfolio of retail, industrial and office properties is extensive and includes a number of the best-known properties in the Fourways area of Johannesburg.
Hyprop Investments
With a dividend yield of over 18%, Hyprop is one of the best-paying dividend stocks in the JSE, and like Accelerate and the fifth-ranked company here, Dipula, it is an investment company focused on real estate, though with more of a global focus. Hyprop specialises in retail centres and owns property across South Africa, sub-Saharan Africa and Eastern Europe.
Dipula Income Fund
Another real estate investment fund, Dipula has interests in retail, industrial, office, residential and corporate property, with a portfolio of 191 properties in total. Much of its real estate strength is in Gauteng, although it has diversified its holdings across South Africa. Dipula has recorded a dividend yield of 17.5%, which puts it inside the top five dividend payers on the JSE as we enter 2023.
