NEPSE Dividend Season: Reliance Spinning Mills Declares Record 30% Cash Dividend as Payouts Show Mixed Trends Across Sectors

The Nepal Stock Exchange (NEPSE) is currently abuzz with dividend announcements as listed companies and mutual funds unveil their profit distribution plans for the fiscal year 2082/83. Investors are keenly observing these declarations, which offer crucial insights into the financial health and future prospects of various entities. While some companies have delighted shareholders with enhanced payouts, others have opted for more conservative distributions or even reduced their dividend rates compared to the previous year, painting a mixed picture of the market's performance.

Leading the pack in this dividend season is Reliance Spinning Mills Limited, which has proposed an impressive 30% cash dividend. This marks a significant turnaround for the company, as it had not distributed any dividends in the preceding fiscal year 2081/82. The substantial 30% cash payout positions Reliance Spinning Mills as one of the most generous dividend declarers among the companies that have announced their proposals so far, signaling robust performance and a strong commitment to shareholder returns.

However, the trend is far from uniform across the market. The banking sector, a cornerstone of NEPSE, showcases varied outcomes. Among commercial banks, Everest Bank has proposed a 15% dividend (5% bonus and 10% cash), a decrease from its 20% payout last year. In contrast, Global IME Bank has increased its dividend to 10% (6% bonus and 4% cash) from 8% previously. Sanima Bank also saw an increase, proposing 10% cash dividend compared to 7.37% last year. Nabil Bank has announced a 15.8% dividend (5% bonus and 10.8% cash), up from 12.5%. On the other hand, Machhapuchchhre Bank's 6% proposal is lower than its previous 8%, and Citizens Bank International's 4% is down from 5.26%. Kumari Bank, which did not offer a dividend last year, has proposed 2.10% this year. Siddhartha Bank stands out with a significant increase, proposing 20% (10% bonus and 10% cash) against 10.53% last year, reflecting strong growth.

Development banks also exhibit a mixed bag. Kamana Sewa Development Bank's 15% dividend is a slight dip from 15.79% last year. Shangrila Development Bank has proposed 10.52% (4% bonus and 6.52% cash), a marginal increase from 10.36%. Garima Bikas Bank has nearly doubled its payout to 20% from 10.53%, while Shine Resunga Development Bank's 16% is higher than its previous 13%. In the finance sector, ICFC Finance has proposed 10.52% cash, a decrease from 15.79% last year.

The hydropower sector, a growing segment of NEPSE, also presents diverse dividend scenarios. Mandu Hydropower has increased its dividend to 12% from 10%. Super Madi Hydropower has announced a substantial 15.789% (15% bonus and 0.789% cash), a significant jump from 5.26%. United Mardi & RB Hydropower and Arun Valley Hydropower have maintained their 5.26% dividend rates. Notably, Snow River Nepal and Vikas Hydropower, which did not distribute dividends last year, have proposed 10.526% each this year, indicating new projects coming online or improved operational efficiency.

Beyond the financial and energy sectors, manufacturing companies like Nepal Lubricants Oil have proposed 21.52% (15% bonus and 6.52% cash), maintaining a similar level to last year's 21.5%. Sarbottam Paints has announced 10.52%. In microfinance, Gurans Laghubitta's 10% (9.5% bonus and 0.5% cash) is lower than its previous 15%. Conversely, the hotel and tourism sector's Kalinchowk Darshan Limited has increased its dividend to 8.94% (8.5% bonus and 0.44% cash) from 5.26%.

Mutual funds are also actively declaring returns for their unit holders. Himalayan 80-20 leads this category with a 15% dividend, the highest among mutual funds so far. While some funds like Prabhu Select Fund and Global IME Balanced Fund-1 have maintained their previous year's payouts (12% each), many have seen a reduction. For instance, Kumari Equity Fund's 10% is down from 11.5%, and Siddhartha Investment Growth Scheme-2's 8% is significantly lower than its previous 20%. However, some funds, such as Nabil Balanced Fund-2 and Nabil Balanced Fund-3, have substantially increased their dividends to 13% each from 3.5% and 2.5% respectively. RBB Mutual Fund-1 has also seen a remarkable increase to 20% from 2.75%.

This dividend season underscores the varied performance across NEPSE's diverse sectors. While a high dividend yield can be attractive, savvy investors understand that it is just one metric among many. A holistic evaluation requires considering factors such as a company's profitability, earnings per share (EPS), net worth, cash flow, share price stability, and the consistency of past dividend distributions. For mutual funds, investors should also scrutinize the Net Asset Value (NAV), investment structure, expense ratio, and the fund's historical performance to make informed decisions. The current trend suggests a dynamic market where careful analysis is paramount for navigating investment opportunities.