UMEME Dividend Analysis - KSh 8 = Ush 222

📌 UMEME Dividend Analysis – July 2025

Dividend per Share: UGX 222 ≈ KES 8.12
Book Closure: 14 July 2025
Ex-Dividend Date: 15 July 2025
Payment Date: On or before 31 July 2025

🎯 Scenarios – What Happens If You Buy UMEME Now(At book closure)?

✅ Scenario 1: Buy Before 14 July and Hold Long-Term

  • Buy Price: KES 22
  • Dividend Earned: KES 8.12
  • Possible Price Drop: to KES 13.88 (KES 22 - 8.12)
  • Unrealized Loss in Value: -KES 8.12
  • If Price Recovers to KES 20:
    ➤ Dividend: KES 8.12
    ➤ Capital Recovery: KES 6.12
    Total Return: KES 14.24

✔️ Best if you're planning to hold for at least 6–12 months. (Dont sell at all after book closure unless price doesnt dip)

⚠️ Scenario 2: Buy on book closure and Sell After 15 July (Ex-Date) - Not advisable, prices may fall down, Sell only possible from Friday (T+3). 

  • Buy Price: KES 22
  • Expected Sell Price: KES 14, if prices adjust to dividend
  • Capital Loss: -KES 8
  • Dividend: +KES 8.12
  • Net Profit Before Fees: KES 0.12
  • Estimated Fees (Buy + Sell): ≈ 3.28% or -KES 0.72
  • Final Net: Loss of approx KES 0.60 per share (~-2.7%)

❌ Not suitable for conservative investors — fees and volatility can reduce your returns.

🧠 Scenario 3: Already Own UMEME? Just Hold

  • You qualify for dividend automatically
  • No entry cost now
  • Risk of price drop is minimal if you're holding already

✔️ Recommended: Hold, receive dividend, and review after 31 July payout.

📊 Cost Breakdown: Brokerage Fees

TransactionEstimated %Cost on KES 22
Buy Fee1.64%KES 0.36
Sell Fee1.64%KES 0.23 (on KES 14 sale)
Total Fees≈3.28%KES 0.59


💡 Summary Recommendation

  • Already own UMEME? ➤ ✔️ Hold to collect dividend
  • Thinking of buying now? ➤ ❌ Not ideal – short-term price drop likely
  • Prefer low risk? ➤ ✔️ Buy Safaricom before 31 July (stable dividend stock)

📊 UMEME vs SAFARICOM – Dividend Play

Stock Buy Price Dividend Expected Drop Net Position
UMEME KES 22 KES 8.12 KES 14 Break-even or small loss after fees
Safaricom KES 26 KES 0.65
More stable long-term investment


🟩 Final Advice

👉 If you're a conservative investor:
✅ Avoid chasing UMEME dividend now — it’s likely priced in.
✅ Hold UMEME if you already own — then reassess after the dividend payout.
✅ Prefer SAFARICOM or unit trusts if you want safety + income.

🧠 Why This Dividend Matters

  • UMEME’s 20-year electricity distribution concession ends March 2025.
  • The company is winding down, and this could be its final or second-last major dividend.
  • It is distributing remaining profits to shareholders before it exits the market.

🔮 Will There Be Future Dividends?

Factor Reality
⚡ Contract ends March 2025
📉 Revenue after 2025 Expected to decline drastically
🏢 Assets May be sold or liquidated
💰 Final dividend in 2026? Possible — from Jan–Mar 2025 profits
🧾 Dividends beyond that? Very unlikely unless liquidation occurs


📉 Expected Price Drop

After 14 July 2025 (book closure), UMEME’s price may fall by KES 7–8 (dividend equivalent), settling near KES 13–15. Since there's no strong future revenue, prices may stagnate or decline further.

📌 Final Recommendation

Investor Type Advice
✅ Already Hold Hold, collect dividend, then review exit
❌ Risk-Averse Buyer Not recommended — price drop likely after dividend
⚠️ Speculator Buy before 14 July, sell if price bounces after payout — risky!
🧠 Income Investor Consider safer dividend stocks like Safaricom, Co-op, or BAT
💼 Long-Term Investor UMEME not ideal — limited future growth


✅ Summary

UMEME is paying a generous final dividend in July 2025, but this marks the end of its power business. While another smaller dividend may come in 2026, the company is not expected to generate new income. If you’re not comfortable with risk, it’s safer to avoid buying now — unless you already hold the shares and are positioned to collect the payout.



Post a Comment

0 Comments