Double joy for BAT investors as share soars after Sh70 dividend boost

British American Tobacco Kenya Plc is attracting renewed investor interest at the Nairobi Securities Exchange after the cigarette maker announced a historic Sh70 total dividend for the financial year ended December 31.

The dividend announcement on Thursday combines a Sh60 final dividend with an earlier Sh10 interim distribution. They amount to roughly Sh7 billion in total payouts to shareholders and represent a 40 per cent increase compared with the prior year’s dividend.

This increase has sparked bullish forecasts among analysts and portfolio managers betting on further share price gains.

The firm’s stock closed strongly on Friday at about Sh567, up from Sh538 the previous session, reflecting robust market demand following the dividend declaration.

Over the last three months, the share has delivered solid returns for investors. Data compiled from trading platforms show the stock up around 18-25 per cent over this period, comfortably outperforming several peers in the market.

This price momentum partly reflects the market’s positive reaction to BAT’s solid earnings and improving profitability indicators.

The listed tobacco giant posted higher profitability despite headwinds, with profit after tax rising about 17 per cent to Sh5.25 billion from Sh4.48 billion in the prior year.

The earnings strengthened as net revenue declined by roughly 10 percent to Sh23.2 billion, largely blamed on illicit cigarettes eating into formal sales volumes.

Industry watchers say while revenue dropped, the company’s cost control measures, reduced operating expenses, and improved finance income helped protect margins.

Operating costs were trimmed by around 15 per cent, and favourable currency dynamics turned last year’s exchange losses into financial income this year.

On Friday, BAT managing director Crispin Achola told the Star the firm is not planning any major investment in the medium term, hence, the decision to give back to investors.

“We accumulated Sh6 billion in retained earnings in 2025. We decided that if we don’t have immediate plans to reinvest back into the business, it probably makes sense to give this back to the investors,” Achola said.

“Anything we’ve paid above Earnings Per Share (EPS) has actually been funded out of retained earnings,” he said.

In addition to BAT’s good news, Unga Group’s share price rose by nearly 10 per cent on Friday after the firm staged a significant financial turnaround, reporting a net profit of Sh523.2 million for the six months ending December 31 (HY2026). That’s a massive increase from the Sh82.2 million reported in the same period the previous year.

The listed flour firm attributed the return to profitability to the sharp reduction in finance costs, which fell 53 per cent year on year to Sh106.2 million, reflecting lower interest rates and reduced financing pressure.

Other firms that performed well at NSE during the week under review include Uchumi, Home Afrika and HF Group.

Generally, there was improved performance at NSE, with the NASI, NSE 25, and NSE 20 share price indices increasing by 2.1 per cent, 2.43 per cent and 1.49 per cent, respectively, during the week ending February 27.

Market capitalisation and total shares traded increased by 2.10 per cent and 28.97 per cent, respectively, while equity turnover decreased by 5.58 per cent.

The money market remained liquid during the period, with open market operations remaining active. Commercial banks’ excess reserves averaged Sh52.3 billion above the 3.25 per cent Cash Reserve Ratio (CRR) requirement.

The Treasury Bill auction of February 26 received bids totalling Sh58.5 billion, against an advertised amount of Sh24 billion, representing a performance of 243.9 per cent. The interest rates on the 91-day and 364-day Treasury Bills declined further, while interest on the 182-day Treasury Bill increased marginally.

Bond turnover in the domestic secondary market increased by 36.94 per cent to close the week at a solid Sh140.9 billion compared to Sh102.9 billion in the previous week.