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?