10 Best High-Dividend Shares and How to Invest them in South Africa

10 Best High-Dividend Shares and How to Invest Them in South Africa revealed. We have conducted an extensive fundamental and technical analysis to find the best High-Dividend Shares in South Africa and provided a guide on how South Africans can invest in them.

This is a complete guide to the 10 Best High-Dividend Shares and How to Invest in them in South Africa.

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Best High-Dividend Shares and How to Invest Them in South Africa Revealed – 7 Key Point Quick Overview

1. ✅ What are High-Dividend Shares?
2. ✅ The 10 Best High-Dividend Shares in South Africa
3. ✅ How can investors invest in High-Dividend Shares in South Africa?
4. ✅ How to Choose the Right Dividend Stocks
5. ✅ The Best Share CFD brokers in South Africa
6. ✅ Conclusion
7. ✅ Frequently asked questions

In this in-depth guide, you’ll learn:

• What are High-Dividend Shares?
• The 10 Best High-Dividend Shares in South Africa
• How can investors invest in High-Dividend Shares in South Africa?
• How to Choose the Right Share CFD Broker in South Africa
• The Best Share CFD Brokers in South Africa

What are High-Dividend Shares?

The dividend yield is a financial metric for assessing the regularity and size of dividend payments made to shareholders in relation to the market price of a share. It is calculated by taking the dividend paid per share and dividing it by the current share price.

A high dividend yield indicates that the corporation’s dividend payout ratio is high. Therefore, a corporation’s dividend yield is routinely compared to the average dividend yield in its industry.

Dividends are paid out of a company’s profits, while retained earnings are used for expansion. As a result, shareholders of a corporation get dividend payments periodically. The dividend yield is the percentage of an investor’s initial investment that is returned to them as dividends.

The percentage form is the most common way to represent it. For example, the dividend yield is calculated using the following formula: Dividend Yield = Cash Dividend per share / Market Price per share * 100.

Stocks with a high dividend yield are a safe bet during uncertain times because of the reliable returns they provide investors.

Investors that choose a low-risk strategy might consider them. However, before putting their money into a firm, investors should verify its value and its history of dividend payments. Companies with a high dividend yield often do not hold a significant number of profits in the form of retained earnings.

Their shares are known as income stocks. In contrast, growth stocks often reinvest many of their profits into the firm, keeping a smaller portion as retained earnings.

The 10 Best High-Dividend Shares in South Africa

Some investors focus on dividend-paying companies in the hopes of generating a steady income stream in addition to capital gains from the stock’s potential increase.

South Africans must remember that there is no silver bullet in investing; dividend stocks may provide some portfolio stability, but they are not likely to beat healthy growth equities.

Datatec Ltd (JSE: DTC)

Datatec is a global provider of information and communications technology (ICT) solutions and services with operations in over 50 countries spanning the Americas, Europe, Africa, the Middle East, and Asia.

With a current market value of ZAR 9.24 billion, or around 0.05% of the equity market on the Johannesburg Stock Exchange (JSE), Datatec Ltd is the 118th most valuable stock currently.

Datatec’s year-to-date performance on the JSE is ranked 83rd based on its gain of 8.18% from its opening price of 38.50 ZAR.

Merafe Resources Ltd (JSE: MRF)

Using its fully owned subsidiary, Merafe Ferrochrome, and Mining Proprietary Limited, Merafe Resources Ltd is involved in the mining and processing of chrome ore into ferrochrome. Shares of Merafe (code: MRF) trade on the JSE Ltd. in the General Mining category.

Merafe’s primary emphasis currently is on its 20.5% ownership interest in Merafe Ferrochrome and Mining (Pty) Ltd.’s share of the EBITDA of the Glencore-Merafe Chrome Venture (the Venture), in which Glencore holds a 79.5% ownership stake.

The Venture was established in July 2004 when Merafe and Glencore South Africa operations (Glencore) combined their chrome activities to become the world’s biggest ferrochrome producer. At the beginning of the year, a share of Merafe Resources was worth 1.20 ZAR.

MRF is worth 1.25 ZAR, placing it at 111th on the JSE’s year-to-date performance rankings. However, the stock’s 14% gain over the previous four weeks ranks it 27th best on the JSE, giving investors reason for optimism in MRF.

Thungela Resources Ltd (JSE: TGA)

The mining operations of Thungela Resources Limited in South Africa are dedicated only to the extraction of thermal coal.

Based on its aggregate coal reserves and marketable coal output, Thungela is one of the nation’s major pure-play producers and exporters, giving investors access to a high-quality thermal coal company with low cash cost and high-margin assets.

With a current market value of ZAR 41.5 billion or around 0.223% of the equity market on the Johannesburg Company Exchange, Thungela Resources Ltd is the 60th most valuable stock on the JSE.

In terms of year-to-date performance on the JSE, Thungela Resources is now ranked fourth after increasing its share price by 260% from its opening price of 84.54 ZAR.

Ayo Tech Solutions Ltd (AYO)

Ayo is a South African company with a strong mission: we assist our clients to become market leaders in their respective industries by enhancing their workforces, streamlining their operations, and creating innovative technological solutions.

In terms of technology, consumers can count on Ayo Technology Solutions Ltd. Companies in the public and private sectors in South Africa. In addition, other nations can get solutions from the company’s subsidiaries.

With a market worth of ZAR 1.15 billion (or around 0.0061% of the equity market on the Johannesburg Stock Exchange), Ayo Tech Solutions Ltd is the 244th most valuable stock.

After opening the year at 3.50 ZAR per share, Ayo Tech Solutions’ stock price dropped by 4.86%, placing it at 184th place on the JSE’s year-to-date performance rankings.

Kumba Iron Ore Ltd (JSE: KIO)

Kumba is a mining conglomerate specializing in the discovery, mining, processing, marketing, and transportation of iron ore. Kumba operates the Sishen and Kolomela mines in South Africa’s Northern Cape to harvest iron ore.

With a market value of ZAR 128 billion or around 0.68 percent of the equities market on the Johannesburg Stock Exchange, Kumba Iron Ore Ltd is the twenty-fourth most valuable stock.

Shares of Kumba Iron Ore started the year trading at 460.09 ZAR but have since dropped by 13.8%, valuing the company at 261st on the JSE. However, investors might feel more at ease with the 9% gain in KIO share price from September 28th, ranking it 53rd best on JSE.

Combined Motor Holdings Ltd (JSE: CMH)

Investment holding firm Combined Motor Holdings Ltd. has significant stakes in the retail motor, automobile rental, and financial services industries via its subsidiaries. The Company’s business is handled via its subsidiaries; it does not engage in any trading.

At a market value of ZAR 2.09 billion, or around 0.011% of the equities market on the Johannesburg Stock Exchange, Combined Motor Holdings Ltd is the 202nd most valuable stock.

In terms of year-to-date performance on the JSE, Combined Motor Holdings is ranked 60th after having started the year with a share price of 24.90 ZAR and increasing its value by 12.5%.

Coronation Fund Managers Ltd (JSE: CML)

It was in Cape Town, South Africa, in 1993 when Coronation Fund Managers first opened its doors to the public. The firm is investment-driven and owner-managed, with 25% employee ownership.

The firm takes a long-term, valuation-based investment strategy and acts as an active manager of financial assets.

With a current market value of ZAR 11.4 billion or around 0.061% of the Johannesburg Stock Exchange’s equity market, Coronation Fund Managers Ltd is the 108th most valuable stock on the JSE.

In terms of year-to-date performance on the JSE, Coronation Fund Managers Ltd is ranked 373rd after starting the year with a share price of 52.54 ZAR and then losing 38.1% of that value.

The 10% improvement in the CML share price since September 28th, ranking it 47th best on the JSE, may calm the nerves of worried shareholders.

Exxaro Resources Ltd (JSE: EXX)

Exxaro is a significant South African diversified resources business interested in the coal, TiO2, ferrous, and energy industries.

It is a public corporation established in South Africa and listed on the JSE. At a market value of ZAR 76.6 billion or around 0.411% of the equity market on the Johannesburg Company Exchange, Exxaro Resources Ltd is currently the 41st most valuable stock.

The share price of Exxaro Resources started the year at 152.87 ZAR, and its 43.4% rise since then places it at 20^th on the JSE’s year-to-date performance rankings. In addition, EXX stock has risen 10% in the last four weeks, ranking it the 49th best on the JSE.

African Rainbow Minerals Ltd (JSE: AIL)

Incorporated in the Republic of Mauritius under the Mauritian Financial Services Act, 2007, African Rainbow Capital Investments Ltd. is a public company doing business as ARC Investments.

A governing body, the Mauritian Financial Services Commission, oversees the industry. With a market valuation of ZAR 31.7 billion or around 0.17 percent of the equity market on the Johannesburg Stock Exchange, African Rainbow Cap Inv is currently the 68th most valuable stock.

Shares of African Rainbow Cap Inv, which opened the year at 6.80 ZAR, dropped by 26%, putting the company’s performance on the JSE 334th year-to-date.

Omnia Holdings Ltd (JSE: OMN)

Omnia is a diverse group that works in agricultural, mining, and chemical application via R&D, manufacturing, and supplying chemicals and specialized services and solutions.

Omnia ensures differentiation via innovation and intellectual capital, increasing consumer value at several points in the supply chain.

With a market cap of ZAR 12 billion or around 0.064% of the equity market on the Johannesburg Stock Exchange, Omnia Holdings Ltd is now the 104th most valuable stock. Shares of Omnia started trading at 64.01 ZAR, making it the 68th best-performing stock on the JSE this year.

How can investors invest in High-Dividend Shares in South Africa?

Investing in dividends has the potential to be very profitable. Stocks that pay dividends have often outperformed the market over the long term, even considering the effect of market volatility.

This is because dividend stocks provide a higher total return due to a steady income stream from dividends and the potential for capital gain. The benefits of this sum return might accumulate over time.

Investors seeking reduced-risk investments, such as those in or approaching retirement, may find dividend stocks attractive due to their lower volatility. However, if you do not know what to watch out for, dividend stocks still carry some risk.

How to Choose the Right Dividend Stocks

There are three typical steps that South Africans must take to ensure that they have an effective dividend investment strategy, these are:

• Understanding how to choose dividend stocks for a portfolio
• Learning dividend stock management strategies
• Strategies for Managing Your Portfolio’s Dividends

Investing in dividends has been around for a long time, and it is a reliable strategy to build wealth while protecting against inflation in a manner that bonds cannot. However, it could be difficult to identify leading dividend payers.

Create a Watchlist

It would help if you started by creating a watchlist of dividend stocks. This is just a list of the top 5-10 stocks you want to acquire.

You may use a few strategies to find companies with a history of regular dividend payments. First, create a stock watch list based on the companies you find.

You can:

• Use TradingView and Simply Wall to view the top Dividend Stocks on the JSE in real-time.
• Consult Media Outlets.
• Use Stock Screeners.
• View different high-quality stock reports and recommendations from analysts.

Use a Stock Screener to Find Stocks

A dividend stock screener successfully reduces the number of investable dividend equities. However, more study is necessary to choose the finest dividend stocks that align with your goals. You can use any of the free automatic dividend stock screeners accessible online.

Understand the business model of the company

Understanding what you are investing in is the first rule of investing. Therefore, South Africans should answer these questions while evaluating stocks:

• What does the business do?
• How do they generate income?
• Where and what business units do they operate?
• Are their products and services declining or in transition?

Evaluate whether the company has a dividend policy

Occasionally, a business will disclose its dividend policy. A declared dividend policy is valuable information and is quite useful for predicting future dividend increases. In addition, a company is more likely to accomplish and fulfill a clearly defined objective.

Calculate the Dividend Pay-Out of the Company

Earnings per share divided by dividends per share yields the earnings-based dividend payment ratio. The value is shown as a percentage.

A reduced dividend payout ratio is a positive indicator. Moreover, it reflects a company’s ability to continue or even raise dividend payments amid adverse economic circumstances.

Moreover, South Africans should know that permitted dividend distribution percentages differ by sector.

View all debt levels of the company

Investors should avoid dividend-paying enterprises if the companies have massive amounts of outstanding debt.

Businesses carrying a debt load are more likely to prioritize the repayment of that debt above the distribution of income in the form of dividends. Therefore, determining a company’s debt-to-equity ratio is quite necessary for investors. Avoid a company if the value is greater than 2.

Consider the Forward Dividend Yield of the Company

The forward dividend yield, or yield, is calculated by dividing the current year’s dividend payout by the current share price. The value is shown as a percentage.

Many investors like dividend yields between 3 and 5 percent. However, if the dividend yield is less than 3% and the stock does not give sufficient current income.

If the yield is much more than 5%, it may signal that dividends will not be raised significantly in the future. Or, in the worst-case scenario, the payout may be decreased.

Screen for the Historical Dividend Growth Rate

The past may not repeat itself. However, it is an excellent beginning point for predicting the future. Nonetheless, if a firm lacks a history of dividend growth, the future may not be much different.

The dividend growth rate over the last 1, 3, 5, and 7 years compounded annually is a key metric studied by most professionals. Therefore, it gives them a fair lot of context, including understanding previous dividend increases.

The ideal rate of dividend increase for investors is between 5% and 8% each year. If the dividend yield is low now, they will need to see a greater growth rate in the pay-out to be satisfied.

Investigate the Growth Strategy of the Company

To get insight into how a business plans to increase its revenue in the future, it is wise to review the firm’s investor presentation, and investors can scan them for useful information.

South Africans should consider how the company intends to grow revenue and earnings and how much. In addition, investors should know whether the company intends to grow revenue organically or via acquisition.

Investors must evaluate whether there is a cost reduction plan to increase profits and overall revenue growth.

Companies that are transparent about their long-term goals are recommended, especially when they can provide figures and methodology next to their promises

Identify the Number of Years that there have been dividend increases

Find out how many years in a row the dividend has been raised by looking at the company’s dividend history.

A lengthy dividend increase history is a positive indicator, and many companies openly mention this. Therefore, companies having a 10-year history of yearly dividend increases are attractive to South African investors.

The term “Dividend Aristocrat” describes companies that have maintained a dividend rise streak of at least 25 years, while “Dividend Kings” have maintained a tradition of yearly dividend increases over the last half-century.

Forecast Dividend Growth

When investors make a dividend growth forecast, they can consider the following:

• Dividend Pay-Out Ratio
• The Growth Strategy of the Company
• The Stated Dividend Policy of the Company
• Historical Dividend Growth over the Last 10 Years

Investors who have a dividend growth forecast can do the following:

• Compare future dividend increases against their forecast.
• It helps to assess the stock’s value.
• It helps investors understand the potential dividend growth, allowing them to plan for future dividend income.

Stock Valuation

Because dividend equities often trade at premium values, particularly when considering the price-to-earnings ratio, it might be difficult to utilize valuation criteria for dividend stocks.

An undervalued dividend stock may be the exclusive investment opportunity for a conservative investor. Therefore, a dollar-cost averaging method is beneficial when considering dividend stock purchases. Using dollar-cost averaging, you invest a certain amount regularly.

While it is still a good idea for investors to investigate purchasing lower-priced companies, it is best to refrain from purchasing or adding to blatantly overpriced dividend equities.

The Best Share CFD brokers in South Africa

In this article, we have listed the best brokers which offer share trading to traders. In addition, we have further identified the brokers that offer additional services and solutions to traders.

Best MetaTrader 4 / MT4 Share CFD broker in South Africa

Overall, Axi is the best MT4 Share CFD broker in South Africa. In addition, the popular Australian broker Axi provides some top assistance to MetaTrader 4 traders.

South Africans can easily customize their trading experience using Axi’s MT4 and NextGen plugins, which enables them to advance their trading.

Best MetaTrader 5 / MT5 Share CFD broker in South Africa

Overall, XM is the best MetaTrader 5 Share CFD broker in South Africa. Since XM is properly regulated in many areas, traders have a selection of adaptable trading accounts.

Additionally, XM offers South Africans an MT5 trading account with 1,000 financial products spread across multiple asset classes.

South Africans may utilize XM’s MT5 account and market depth indicators, hedging, complete EA capability, and a few additional tools to give their trading a competitive advantage.

Best Share CFD broker in South Africa for beginners

Overall, Pepperstone is the best Share CFD broker in South Africa for beginners. Pepperstone provides free access to trading guidelines, CFD, CFD trading materials, courses, and videos.

Additionally, Pepperstone often holds webinars, and its website offers free access to prior online seminar recordings.

Best Low Minimum Deposit Share CFD broker in South Africa

Overall, FBS is the best Low Minimum Deposit Share CFD broker in South Africa. South Africans may use the leverage of up to 1:3000 with FBS to enter bigger trades starting at 1 USD / 19 ZAR. Additionally, traders can access the world’s financial markets using FBS’ MT4, MT5, or the FBS Trader.

Best ECN Share CFD broker in South Africa

Overall, RoboForex is the best ECN Share CFD broker in South Africa. RoboForex provides accounts with ECN pricing so users can start trading on foreign exchange markets for a little charge.

RoboForex furthermore provides zero-pip spreads on several CFDs across important markets.

Best Islamic / Swap-Free Share CFD broker in South Africa

Overall, AvaTrade is the best Islamic / Swap-Free Share CFD broker in South Africa. All traders, even Muslims barred from getting or paying interest, could use AvaTrade’s well-regulated STP and Market Maker services.

Despite having higher spreads, the AvaTrade Islamic Account gives traders access to a few halal marketplaces that may be traded.

Best Share CFD Trading App in South Africa

Overall, FXTM is the best Share CFD trading app in South Africa. South Africans can easily manage their accounts and get current currency rates with the FXTM app. South Africans may also access their Invest copy-trading account using the FXTM app.

Best ZAR Share CFD broker in South Africa

Overall, Exness is the best ZAR Share CFD broker in South Africa. For 190 ZAR ($10), South Africans can easily open an Exness account and access various financial markets, attractive spreads, and limitless leverage per account balance.

Best Lowest Spread Share CFD broker in South Africa

Overall, FxPro is the best lowest-spread Share CFD broker in South Africa. In addition, via cTrader, FxPro provides some of the lowest forex spreads.

The fees for these spreads start at 9 USD each turn, and the spreads begin at 0.0 pips. In South Africa, FxPro is a well-known and reputable broker subject to FSCA regulation.

Best Nasdaq 100 Share CFD broker in South Africa

Overall, Capital.com is the best Nasdaq 100 Share CFD broker in South Africa. With over 90,000 customers globally and 5,600 tradeable assets, Capital.com is a well-known CFD broker. In addition to numerous other CFDs on indices, Capital.com also provides Nasdaq 100.

Best Volatility 75 / VIX 75 Share CFD broker in South Africa

Overall, Plus500 is the best Volatility 75 / VIX 75 Share CFD broker in South Africa. For South Africans who wish to trade CFDs on the Volatility 75 index, Plus500 is the best choice. Spreads with Plus500 start at 1.17% for VIX transactions, and commission costs are not an issue for South Africans.

Best NDD Share CFD broker in South Africa

Overall, LiteFinance, previously known as LiteForex is the best NDD Share CFD broker in South Africa. To ensure that South Africans get the best price compiled from international liquidity sources, LiteFinance enables STP and ECN execution on transactions.

Additionally, LiteFinance provides a selection of account kinds and robust trading software.

Best STP Share CFD broker in South Africa

Overall, Libertex is the best STP CFD Share CFD broker in South Africa. Libertex allows customers to trade major, minor, and exotic CFD pairs. In addition, Libertex also offers flexible trading conditions across a range of Share CFDs.

Libertex provides access to the Libertex, MT4, and MT5 trading platforms to its 3 million platform users, which includes South Africans and traders.

Best Sign-up Bonus Share CFD broker in South Africa

Overall, JustMarkets is the best sign-up bonus Share CFD broker in South Africa. JustMarkets is a flexible broker with favorable trading terms.

All South African traders whom JustMarkets have confirmed are given a 30 USD no-deposit bonus that they may use to start trading various markets and trying out the software.

Conclusion

Companies often distribute a percentage of their earnings to their shareholders and investors in the form of dividends to reward them for their financial support. However, not all successful firms choose to provide dividends to shareholders.

In addition, a company with a high yield does not indicate it is the ideal dividend investment for your portfolio. The optimal portfolio differs from person to person depending on their objectives and desired timeframes.

There are numerous explanations for a high dividend yield, but not all are positive. For instance, dividend yields may rise when stock prices decrease. In addition, some businesses become indebted because they pay out too much in dividends.

The dividends paid by the over-spenders might need to be reduced if their costs rise beyond what the company can afford. As a result, traders in South Africa are cautioned against making hasty investments in high-dividend equities without thorough research.

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Frequently asked questions

Are dividend stocks in South Africa a suitable investment choice?

Dividend stocks are ideal because they offer investors two income streams. One is through profits earned when a stock’s value increases, while the other is when investors are paid dividends.

How do dividends work in South Africa?

In South Africa, dividends are paid per share of stock.

Can I consider dividends as free money?

Dividends are not free money; they tend to help investors supplement income when economic conditions are not ideal.

How long must South Africans hold stocks before they can receive dividends?

Investors must have held a stock for at least two days before the date of record and at the close of the trading day before the ex-date.

What is the largest drawback to high-dividend stocks?

One of the largest downsides is that stocks may not grow as much or as quickly as investors would like.

When is the best time for South Africans to invest in high-dividend stocks?

You should purchase high-dividend stocks when it forms part of a long-term strategy when you identify high-quality stocks that pay high dividends, when the stock market is low, or when you can benefit from capturing the next dividend.

Addendum/Disclosure

No matter how diligently we strive to maintain accuracy, the financial markets are volatile that could shift and change at any given time, even if the information supplied is correct at the time of going live.