Let me also say that buying shares is one of the best financial investment options in the market. The Kenya stock market is well-developed in the region. Supported by the strong economy, investment in shares is a big source of passive income locally. Shares are also known as Stocks.
Benefits of Buying Shares in Kenya
There are various benefits you get through buying shares in Kenya. Some of these include;
1. Dividend payments – These are regular payments to shareholders based on the company’s performance. Dividends are paid either semiannually or annually. The number of dividends depends on the number of your shares.
2. Long-term wealth creation– Investing in shares helps you to create wealth in the long term through share price gain. The price of shares is not static making it possible to rise in the future. A rise means your investment value grows as well.
3. Company ownership- Buying shares gives you a percentage of ownership in that company. Hence, this is a source of pride and also allows you to participate in the decision-making process such as voting during the annual general meetings (AGM).
4. Ability to liquidate your investments– You can easily dispose of your shares in the market without any challenges through your stock broker. This is different from other investment assets such as saccos that require you to give prior notice.
5. Inflation hedging– Shares are good assets to mitigate the loss of value through constant inflation. This happens by ensuring the share price gain is more than inflation levels. As an example, if the inflation is 5%, a share price gain of more than that ensures your wealth is at least the same or higher.
To start this process, there are various requirements that you need to meet. Some of these include;
- Have a CDS account (How to Open a CDS account in Kenya)
- Be at least 15 years old
- Have a bank account
- Register with a broker.
- Investments capital
Top 20 best shares to buy in Kenya
Buying of shares happens through the Nairobi Securities Exchange. This is the body mandated by the Capital Markets Authority to list companies in Kenya. However, to access the NSE, you need to have a stock broker account. Below is the list of the Top 5 best stock brokers in Kenya.
There are various companies listed on the Nairobi Securities Exchange. These companies are in different industries such as banking, manufacturing, agriculture, service, and telecommunications. This list of NSE-listed companies keeps changing as companies list and delist.
Investing in shares requires you to do adequate market research before settling on the best company to buy. However, the below list contains some of the top companies both in demand and market valuation.
Safaricom is not only the largest company in Kenya but also the most profitable. As such, it has attracted a lot of investors to an extent that it accounts for almost 50% of all the NSE value.
Being in the technology sector and controlling almost 70% of the telecommunication and mobile market, the company has a huge future potential making it lucrative to invest in. Learn more on the breakdown of how to buy Safaricom shares.
One of the main products that give Safaricom value is the M-PESA. This is the largest mobile money transfer channel globally and has an almost near monopoly in Kenya. The company has also been posting good results in the past as well-paying consistent dividends.
At the time of listing in 2007, the company’s share price was 4 shillings. However, it has been rising consistently to hit over 30 shillings in recent times. Based on the company’s performance, there is still room for growth in the future.
2. Equity Bank
Equity bank is the largest and most profitable bank in the country. With operations in the regional market, the bank continues to offer value to its investors both in terms of dividends and share price gain.
As a leader in financial services in this part of the continent, Equity bank is a high-potential company for investing in the long term. The bank also has a well-diversified portfolio having opened its own mobile money and telecommunications subsidiary known as Equitel.
3. KCB Bank
KCB bank comes second just after equity bank both in profitability and market asset base. It is also present in the regional market in countries such as South Sudan and Rwanda. This expansion has seen it attract interest from investors who expect these investments to yield long-term value.
The bank is consistent in dividend payments making it among the top 20 best shares to buy in Kenya.
4. East African Breweries
As a leader in the beer market, East African Breweries is a top Kenyan company whose interest among investors remains high. The fact that it controls this market makes it a suitable company to invest in.
This is an industry that is highly lucrative because alcoholic drinks will always have demand. The only key item to note is that EABL shares price is high compared to other listed companies. Hence you need to have higher capital to invest in it.
The company also has a good understanding of the market having been operational for over 100 years.
Kengen also known as the Kenya Electricity Generation Company is the biggest electricity generator in the country. Power is a big industry due to its aspect as a basic need for almost every Kenyan.
The power demand will likely keep rising in the future making Kengen a lucrative company to invest in. The company is also heavy on green energy such as geothermal. As you know, this is where the world is moving and hence the company sits in the middle of this growth.
The company has recorded sustained profits for several years. The reason for this is the ready power market. It is also starting to expand regionally with contracts to drill for geothermal energy in neighboring Ethiopia and Djibouti.
This will only help it to expand resulting in more value for investors.
6. Co-operative Bank
As the largest bank in Kenya, Co-operative Bank is a top investment option to buy shares in Kenya This is because it remains profitable and pays dividends consistently.
It is also very hard to get it wrong in the financial industry such as banks due to the demands for these services and healthy regulations.
7. Absa Bank
Formerly known as Barclays Bank, ABSA bank is another top-tier bank in the country both in asset base and profitability.
The bank also pays regular dividends and has sustained a consistent share price gain.
8. NCBA Bank
NCBA bank comes from the merger of both CBA and NIC banks a few years ago. As the 4th largest bank in the country, NCBA shares are among the top 20 best shares to buy in Kenya
The bank has also maintained profitability and pays regular dividends to its investors. some of the main products the bank supports are Mshwari and Fuliza. These they do jointly with Safaricom and represent some of the largest mobile lending platforms in the country.
9. Kenya Power
Kenya power is the only and largest power distribution company in the country. This monopolization makes investing in the company an ideal market decision.
However, as a parastatal, there are some risks such as some decision-making in the company that could be political. Such a case could affect performance.
However, the company remains a top share investment option.
10. Centum Investment
Centum is an investment company with a portfolio across various industries such as finance, real estate, and agriculture.
The firm is famous for its regular dividend payments. Although the share price is currently trading lower, the business is highly lucrative for long-term investment.
11. British American Tobacco (BAT)
BAT is among the blue chips in the NSE due to its high profitability and dividend payments to its investors. The company deals mainly with cigarette production and tobacco farming. Just like the alcoholic industry, this is a high-demand and high-reward sector.
With a near monopoly market share, the good performance is likely to continue in the future. The only risk that comes with investing in such an industry is the unpredictability of government regulations that could affect businesses such as high taxation.
12. Unga Group
Unga group is a leading company in the manufacture of both human and animal feeds. As an agricultural country, the company has a ready market due to the demand for these services.
Some of the top products produced by the company include jogoo and Hostess maize meals. Hence, due to a guaranteed market for these types of products in the future, investing in the Unga group is a wise decision.
13. Jubilee Insurance
Jubilee is a market leader in the insurance industry in Kenya. The company offers various products that are relevant and useful to various classes of clients. Some of the services it offers include life insurance, medical insurance, and general insurance.
The key secret to buying jubilee shares is the fact that the demand and need for insurance are increasing in the country. This will act as an enabler for the growth of insurance companies such as Jubilee.
In return from this growth, you will benefit from increased dividends payout and share price gain.
14. Sanlam Insurance
Although it is among the latest insurance companies to join the Kenyan market, Sanlam insurance is already gaining in market share.
This has made it a top option for investors in the stock market.
15. Total Energies
You can’t discuss the oil industry in Kenya without touching on total energies. Total is among the largest oil companies in Kenya with a wide network of petrol stations.
The relevance and use of oil make the company a lucrative investment choice. Hence, investing in total means you have faith this market will keep expanding.
Total energies are also highly profitable and regular in dividend payments.
16. Bamburi cement/Lafarge Kenya
Cement is a key pillar of the construction industry. Hence, why not invest in a company that controls this market from all angles? With this, I mean Bamburi cement. A company that has clear market leadership in this sector.
The company is currently known as Lafarge Kenya after its acquisition by the giant French cement manufacturer Lafarge.
As long as people are doing construction, there will always be a need for cement. Without any end in construction, investing in Bamburi cement shares could be your ticket to riches In the future.
17. Nation Media Group
Nation Media Group is a leading company in the media industry with a good market share in the television, print, and radio industries. Some of the most common media portfolios include the top newspaper in the country daily nation and NTV television.
Consumption for content is expanding making Nation Media Group a beneficiary of this growth. The company also pays dividends regularly increasing the lines of income.
Kakuzi is among the largest companies in the agribusiness industry in Kenya. The company has thousands of acres for different types of farming. Some of these include tea, livestock, trees, and avocado.
The company also boasts of being listed both in the Nairobi and London securities exchange. Farming is a long-term business that will have relevance for many years to come. Hence, this is a high-potential investment option if you are targeting long-term wealth creation.
19. Sasini Tea
As a leading country in tea production across the world, there are various lucrative sectors that you can invest in this area.
As such, Sasini is a market leader in tea farming with vast estates across the country. The demand for tea can only grow in the future as consumption increases. This combined with favorable government policies makes Sasini among the top 20 best shares to buy in Kenya.
20. I&M Bank
I&M Bank completes this list. It is just one of the many highly profitable banks in the country. Banking services are very key for a developing economy such as Kenya. The bank is also highly profitable and pays regular dividends.
In addition to this, the bank also has a presence across the African market.
What is the process of buying shares in Kenya?
Buying shares is not as complicated as some Kenyans think. You first need to have a Kenyan bank account with a local bank. Learn more on how to open a bank account in Kenya.
The reason for this is you will need it to open a CDS account. This is provided by your stock broker. Here is the list of the top 5 best stock brokers in Kenya.
Once you have the CDS account, you are now ready to top up and make the transaction. Some of the rules governing this are you can only buy a minimum of 100 shares per transaction. The limit you can deposit in your CDS account is also 5,000 shillings.
This is key information as your capital is what will determine the shares to buy. If you have a smaller amount, you should target the lowly valued shares to meet the threshold. These are known as penny stocks in the market.