How to Make Money From NSE Shares Without Selling Them

Investors in the Nairobi Securities Exchange (NSE) can make money in two main ways: through capital gains when they sell shares at a higher price than they bought them, and through dividends paid by companies to their shareholders.

In this article, we focus on dividends, which are payments companies distribute to shareholders from their profits.

In this case, when one buys shares in a company, they become a part-owner of that business. If the company makes profits and decides to distribute part of its earnings, the investor receives a dividend while retaining their shares.

However, not every company pays dividends. Established businesses with consistent profits may distribute part of their earnings to shareholders, while companies seeking to expand may retain more money to finance growth.

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One way to identify companies that distribute a significant share of their earnings is by looking at the dividend payout ratio.

The dividend payout ratio measures the proportion of a company's earnings distributed to shareholders as dividends. A higher ratio means the company is paying out a larger share of its reported profits.

Based on the reported figures for the 2025 financial year, British American Tobacco Kenya (BAT) had the highest dividend payout ratio of 133%.

BAT Kenya’s payout exceeded its earnings after the company abandoned plans for a VELO manufacturing plant, freeing up cash previously reserved for the project. It used accumulated reserves and retained earnings to fund the extra dividend, describing the bumper payout as a temporary return of surplus cash rather than a permanent change to its dividend policy.

However, having a high payout ratio is not a guarantee to invest, as investors should examine a company’s earnings, cash flow, dividend history and ability to sustain future payments.

The other companies that had the highest dividend payout ratios were Standard Chartered Bank Kenya (95.5%) and the Nairobi Securities Exchange (NSE) at 70%.

Stanbic Holdings has a dividend payout ratio of 64.4%, while Safaricom’s stood at 63.34%.

The other top companies were East African Breweries (EABL) at 50.03% and NCBA Group at 50%.

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Difference Between Dividend Yield vs Dividend Payout Ratio

Although the two measures are related, they tell investors different things.

The dividend payout ratio shows the proportion of a company's earnings distributed as dividends. Dividend yield, on the other hand, measures annual dividends per share relative to the share's market price.

For example, Standard Chartered Bank Kenya paid a dividend of Ksh23 per share in the last financial year. An investor who bought the share at Ksh155 in June 2023 would have a dividend yield of approximately 14.8%, assuming a Ksh23 annual dividend.

However, an investor buying the same share at Ksh318 would have a yield of approximately 7.2% if the company paid the same Ksh23 dividend.

The dividend is unchanged, but the return relative to the purchase price is different.

This is why investors should consider both a company's dividend payout ratio and its dividend yield when assessing a potential investment.

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Why investors buy dividend-paying shares and what to consider

Dividend-paying shares can provide investors with cash income without requiring them to sell their investments.

Investors can use the money to supplement their income or reinvest it to purchase additional shares. Reinvesting dividends can help grow a portfolio over time, particularly when a company continues paying dividends and its share price performs well.

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However, dividend payments are not guaranteed. Companies can reduce or suspend dividends if their earnings weaken, cash flow deteriorates, or business priorities change.

A high dividend payout ratio may also signal that a company is distributing more than it can comfortably sustain over the long term.

Before investing, examine the company's financial performance, cash flow, dividend history, debt levels and share price. The objective is not simply to find a company paying the biggest dividend, but one that can potentially sustain its payments while remaining financially healthy.