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MBABANE - Large-cap stocks with well-established financials in Eswatini tend to put dividend investors at more ease than small-cap companies with higher yields.

This includes Royal Eswatini Sugar Corporation (RES), Swaziland Empowerment Limited (SEL) and Inala Capital Limited.

There are relatively few large-cap companies with a market capitalisation of E2 million or more in Eswatini. Yet this select bunch makes up the most significant chunk of the overall ESE weight.

This was mentioned by the Eswatini Stock Exchange (ESE) in their monthend report.

ESE said even though there was little correlation between dividend yield and market cap, a large market cap tends to put investors at ease.

“It’s usually an indication of mature businesses with stable financials. And stable financials typically mean stable dividends,” they said.

They also mentioned that if you are looking for large-cap dividend stocks that offer a decently high dividend yield, there are three mature businesses you should look into.

Royal Eswatini Sugar (RES) Corporation has a market capitalisation of E1 464 467 104, and it’s currently offering a juicy 5.2 per cent yield, despite the stock trading just 8.4 per cent below its pre-pandemic peak, so it’s not just a discounted-driven high yield.

Lock

ESE said if you can buy the company at a dip, you may be able to lock in a much higher yield and benefit from some recovery-fuelled capital-appreciation potential, which isn’t the company’s forte in general.

Another significance of the market capitalisation (size) of this giant is that it’s currently the largest life exporting company in the country.

It has an enormous local and international presence and a diversified business model. Its dividends are backed by a very trade payout ratio (33 per cent), and it’s continuing with its dividend-growth streak and sustaining its aristocratic title.

As an emerging market, Inala Capital Limited market cap stands at E97 191 900 and is currently offering the most significant yield as well.

The 2.26 per cent yield is quite decent, especially considering that the stock is currently trading near its all-time high valuation. ESE said the capital-appreciation potential is comparable to grow, as the stock has risen about 50 per cent in the last year.

It’s much better than mere capital preservation, especially if you consider the dividend-based return potential and ESE’s status as a Dividend Aristocrat, which ensures that the payouts will most likely go up, not down, in the coming years.

The dividend hikes that ESE offers are high enough to counter inflation, which is a very desirable trait in a dividend stock used for passive-income generation.