Nepal's Dividend Season Heats Up: Companies Gear Up for Pre-Dashain Payouts Amidst Strong Sectoral Performances

The Nepali capital market is abuzz with activity as listed companies commence the distribution of returns to their shareholders from the earnings of the last fiscal year. With the festive season of Dashain approaching, investor anticipation is at an all-time high, eagerly awaiting dividend announcements from their respective investments. While some companies have already declared their payouts, a significant number are in the final stages of preparation, aiming to reward their loyal shareholders before the major national festival.

A focal point of investor attention remains the commercial banking sector, traditionally a cornerstone of the NEPSE index. Despite approximately 40 days having passed since the commencement of the current fiscal year, commercial banks have yet to make their dividend declarations. However, behind the scenes, these financial institutions are diligently working towards distributing dividends to investors ahead of Dashain. This process involves a crucial step: seeking prior approval from Nepal Rastra Bank (NRB), the central bank and primary regulator of the financial sector. Several prominent commercial banks, known for their robust dividend-paying capacity, including Everest Bank, Sanima Bank, Nabil Bank, Kumari Bank, and Machhapuchchhre Bank, have already submitted their financial statements from the last fiscal year to NRB for pre-approval. Similarly, Nepal Infrastructure Bank (NIFRA), a key player in the infrastructure financing space listed on NEPSE, has also sought NRB's green light for its dividend distribution. Once NRB grants its approval, these major players are expected to swiftly announce their dividends, injecting significant liquidity and confidence into the market.

Beyond the commercial banks, other sectors have already stepped forward with encouraging dividend announcements. So far, two development banks, six hydropower companies, and seventeen mutual funds have declared dividends for their shareholders and unit holders, setting a positive tone for the dividend season.

In the development banking segment, Shangrila Development Bank has proposed a total dividend of 10.52%, comprising 4% bonus shares and 6.52% cash. Meanwhile, Kamana Sewa Bikas Bank has announced a 15% cash dividend and has already convened its Annual General Meeting (AGM) to approve this proposal, signaling its readiness to distribute returns.

The hydropower sector, which has recently garnered significant investor interest, continues to impress. Super Madi Hydropower leads the pack with the highest dividend declaration among its peers, offering a total of 15.78% (15% bonus shares and 0.78% cash). Other hydropower companies focusing solely on cash dividends include Hilton Hydro Energy with a substantial 20%, Ashutosh Energy at 18.94%, Kabeli Hydropower at 16.31%, Mandu Hydropower at 12%, and Sapsu Kalika Hydropower at 5%. This strong performance in dividend payouts aligns with the sector's impressive financial health, as evidenced by an average net profit increase of over 471% across hydropower companies by the fourth quarter of the last fiscal year. Out of 111 hydropower companies, 91 reported net profits, underscoring the sector's growing profitability and potential, although 20 companies still grapple with losses.

The mutual fund sector has also contributed significantly to the dividend landscape, offering attractive returns to unit holders. Prabhu Smart Fund and Prabhu Select Fund, both under Prabhu Mutual Fund, have declared a uniform 12% cash dividend. Following closely, Siddhartha Investment Growth Scheme-3, NMB Sulav Investment Fund-II, Kumari Equity Fund, and Kumari Dhanabriddhi Yojana are set to distribute 10% cash dividends. Reliable Samriddhi Yojana has announced 8.42%, while Siddhartha Investment Growth Scheme-2 and MBL Equity Fund have proposed 8% dividends each. Further contributions come from NMB Saral Bachat Fund-E (5.25%), Sanima Growth Fund (5%), Kumari Sunaulo Lagani Yojana (4.7%), and both Sunrise Focused Equity Fund and NMB Hybrid Fund L-II (4.5% each). Even at the lower end, NMB 50 (3.15%), Siddhartha Systematic Investment Scheme (3%), and Kumari Sabal Yojana (2.9%) are providing cash returns, highlighting the broad-based commitment to shareholder value.

For investors to be eligible for these dividends, it is crucial to be registered as a shareholder by the day preceding the specified book closure date. While some book closure dates have already passed, several important dates are still approaching. Reliable Samriddhi Yojana's book closure is scheduled for Bhadra 10. Both Siddhartha Investment Growth Scheme-2 and Siddhartha Investment Growth Scheme-3 have their book closure on Bhadra 15. For development banks and other funds, Kamana Sewa Bikas Bank and Sanima Growth Fund have set their book closure date for Bhadra 18, with Kamana Sewa having already called its AGM. Additionally, three hydropower companies—Hilton Hydro Energy, Ashutosh Energy, and Kabeli Hydropower—have their book closure date on Bhadra 19.

The ongoing dividend season, particularly with the anticipated announcements from major commercial banks, is expected to significantly boost market sentiment and liquidity. These payouts provide investors with tangible returns, reinforcing confidence in the Nepali capital market and encouraging further participation, especially as the nation gears up for its biggest festival. The diverse range of dividend declarations across various sectors underscores the market's dynamism and the commitment of listed entities to shareholder value.