There are many benefits of joining a Sacco Society in Kenya. However, most people look out for Saccos with the highest dividend before joining one.
In a publication made in 2023, the Sacco Societies Regulatory Authority of Kenya (SASRA) outlined a list of Saccos licensed to operate in the country. A potential member should consider joining a licensed Sacco.
As of 2023, Nyati Sacco had the highest dividend, with a 21% payout on share capital and 11.3% on members’ savings and deposits. Other Saccos that were on the top 5 list include Magadi SACCO, Tower SACCO, Mombasa Port SACCO, and Yetu SACCO.
This article therefore explores a list of Saccos with the highest dividend in Kenya, highlighting dividend payouts on both share capital and members’ contributions.
What is a SACCO?
The term SACCO is a short form for Savings and Credit Cooperative Society. It is a type of financial institution typically established by members who share a common interest.
There are SACCOs formed by people from different professions. For example, Mhasibu SACCO by accountants, TransNation SACCO and Mafanikio SACCO for teachers, and Biashara SACCO by business people.
In Kenya, SACCOs are governed by SASRA. A Sacco’s principal objective is to give its members access to credit facilities, dividend payments, and the opportunity to save and earn a return on their savings.
What are Dividends?
The amount you consistently receive from the annual profits is referred to as a dividend. Monthly, quarterly, semi-annual, or annual dividend payments are made based on the terms and policies of the SACCO.
The regular dividend payouts motivate you to save or invest more. The dividend distributions increase as you put in more work.
How Do You Earn Dividends In A SACCO?
Dividends are payments made to you as compensation for the shares you have contributed. A SACCO typically distributes dividends if, after a given fiscal year, it has excess funds in reserve.
SACCOs distribute two kinds of dividends overall. Payouts on members’ savings must be made first; this only applies to members who have deposit accounts.
Secondly, shareholders receive dividend payments from their share capital. However, on the whole, share dividends are typically larger than member deposits.
How Are Dividends Calculated in Kenya?
There are many methods used to calculate dividends in Kenyan Saccos. Two of them are discussed here.
Flat Rate Dividend Calculation
Of the two, the Flat Rate method is the easiest to understand. It just needs to take into account the members’ total dividend payout and their end-of-year SACCO shares.
The following formula can be used to determine dividends when applying the Flat Rate method:
Dividends = the members’ end-of-year share ÷ member’s total share × dividend amount
Let’s take SACCO X, where the total members’ share is Ksh 5,000,000 and the dividend amount is Ksh 100,000. Assuming a member has shares valued at Ksh 50,000, what is the amount of dividend that he will receive?
Using the preceding formula, the result is 50,000 ÷ 5,000,000 × 100,000. That will provide us with Ksh 1,000. The member will receive that amount in dividends.
Pros of Flat Rate
- Simple to work out
- Easy to understand
Cons of Flat Rate
- discourages members from starting to save early because, in any case, they will receive the same payout at whichever time they choose to save (which is unfair).
- It also works against the SACCO because late savers use up the majority of the reserve.
Pro Rata Dividend calculation
Unlike the flat rate method, Pro Rata pays dividends evenly. By giving SACCO members the option to receive monthly interest allocations, it distributes dividend payouts equitably.
Pro Rata, then, entails changing annual rates into monthly rates for this reason. Here:
Dividend rate = Declared shares at year-end ÷ outstanding shares at year-end × 100%
Pros of Pro Rata
- It’s fair, as the earlier the members save, the more the payout
Cons
- It’s not as straightforward as Flat Rate technique
When do Saccos pay Dividends in Kenya?
After holding their annual general meeting (AGM) and approving the payout, the majority of SACCOs in Kenya pay dividends at the end of the year. Because it depends on the location of the AGM in a given year, the month is therefore not specific.
Saccos With the Highest Dividend in Kenya
Below are the Saccos with the highest dividend in Kenya as of 2023.
| – | SACCO Identity | Registration | Minimum Share Capital | Interest on Member’s Deposit | Dividend on Share Capital |
| 1. | Nyati SACCO | Ksh 500 | Ksh 30,000 | 11.3% | 21% |
| 2. | Magadi SACCO | Ksh 2,000 | Ksh 20,000 | 14% | 20% |
| 3. | Tower SACCO | Ksh 500 | Ksh 500 | 13% | 20% |
| 4. | Mombasa Port SACCO | Ksh 500 | Ksh 1,000 | 12.5% | 20% |
| 5. | Yetu SACCO | Ksh 1,000 | Ksh 200 | 13% | 18% |
| 6. | Bandari SACCO | Ksh 1,000 | Ksh 10,500 | 11.50% | 18% |
| 7. | Olin SACCO | Ksh 0 | Ksh 40,000 | 12% | 17.5% |
| 8. | Unison SACCO | Ksh 1,000 | Ksh 40,000 | 12.5% | 17% |
| 9. | IG SACCO | – | Ksh 100 | 12.2% | 17% |
| 10. | Winas SACCO | Ksh 500 | – | 12.58% | 15% |
Conclusion: Saccos with the highest dividends in Kenya
With a 21% payout on share capital and an 11% dividend on members’ deposits, Nyati SACCO has to be the highest dividend-paying SACCO in Kenya.
Read also, Top 10 Best Saccos in Kenya to Invest In.
That does not, however, imply that the others are not deserving of attention. Recall that all of these SACCOs bring people together around a shared interest; all you have to do is figure out where you fit in.
