Feeling stuck on your finances? Well, dividend stocks exist as a favored solution to earn passive income. However, the dealbreaker is that you should know how this whole thing works.
That’s why this TRU Insight sustains you with expert insights and instills comprehensive financial literacy as you embark on your way through the stock market.
We’ll brush up on the basics for beginners and provide an additional top 3 best dividend paying company.
Dividend stocks, in particular, have some companies that pay monthly dividends to their shareholders. You must just dig for the real gem in the stock market and immerse yourself in everything you need to know about stock investing in general.
Read on to learn more.
Introduction to Dividend Stocks: A Beginner’s Overview
From someone’s perspective, looking at the charts of companies that pay monthly dividends can be overwhelming.
But here’s the thing: Stock Trading highly depends on the company’s stability.
The simple logic in here is looking at this simple process:
- You invest in a company by buying its stock
- The company earns profits
- It shares part of those profits with you because you invest in it, and that is your Dividend.
Basically, when you buy shares, you become a shareholder. That means you own a small part of the company, and in return, you’re entitled to a portion of its profits.
The actual amount you receive depends on how many shares you own and the dividend the company declares per share. For example, if a company pays 2 USD per share and you own 100 shares, you will receive 200 USD in dividends.
Dividend stocks, in particular, are companies that reward shareholders by paying out dividends. It’s either in cash or additional shares as a way of saying “thank you” for investing in them.
If you want to navigate the stock market in general and unlock more opportunities, joining a reputable trading community is a great way to pave the way for your stock trading needs.
CommuniTrade offers a well-informed space for thousands of verified stock traders to learn more about this financial instrument.
Harmonize the tools from TRU Analytics that provide data-driven signals, and an educational hub that offers stock courses in TradeGeek.
Moreover, stock trading is more bearable with stock-focused insights from experts and from fellow traders. This will help you keep up with what’s happening in the stock market.
Top 3 Highest Dividend Paying Companies in South Africa
With South Africa’s economic sectors growing steadily, many investors are turning to well-established companies listed on the JSE — especially those known for reliable dividend payouts.
Below is a curated list of some of the top dividend-paying shares worth exploring:
1. Life Healthcare Group Holdings (JSE: LHC)
Life Healthcare is one of South Africa’s largest private hospital groups, known for its strong presence in the healthcare sector.
It’s considered a go-to stock for investors looking for stability and consistent dividend payouts in a defensive industry like healthcare.
| Dividend Yield | 3.67% |
| Market Capitalization | ZAR 19.8 billion |
| EPS (TTM) | Not listed |
| Payout Ratio | -81% |
| Dividend Frequency | Quarterly |
Although Life Healthcare offers a modest dividend yield of 3.67%, it pays dividends quarterly, which can be appealing for investors seeking regular income.
The negative payout ratio suggests the company is currently paying out more in dividends than it earns, which may not be sustainable long-term.
However, its large market cap shows it’s a well-established company, and its presence in the healthcare sector adds a layer of defensive stability.
2. Exxaro Resources (JSE: EXX)
Exxaro is a major player in South Africa’s mining sector, especially in coal and renewable energy. It’s popular among dividend investors for its strong cash flow and consistent semi-annual dividend payouts.
| Dividend Yield | 10.07% |
| Market Capitalization | ZAR 44.6 billion |
| EPS (TTM) | Not listed |
| Payout Ratio | 74.37% |
| Dividend Frequency | Semi-Annual |
Exxaro’s high dividend yield of over 10% makes it a standout for income-focused investors. The payout ratio of 74.37% indicates that the company is distributing a large portion of its profits to shareholders but still keeping enough to reinvest in the business.
Kumba Iron Ore (JSE: KIO)
Kumba Iron Ore, a subsidiary of Anglo American, is one of the largest iron ore producers in Africa. It’s a favorite among income investors due to its high dividend yield and zero debt, making it a financially strong pick.
| Dividend Yield | 13.42% |
| Market Capitalization | ZAR 92.32 billion |
| EPS (TTM) | ZAR 45.59 |
| Payout Ratio | 84.94% |
| Dividend Frequency | Semi-Annual |
Kumba offers a very high dividend yield of 13.42%, which is attractive for investors looking for strong returns. Its payout ratio of nearly 85% shows that most of its earnings are returned to shareholders.
What makes it even more appealing is its zero debt, meaning the company isn’t relying on borrowed money. This is a sign of excellent financial health and dividend reliability.
Read more: Best 10 Shares to Buy in South Africa to Watch in 2025
How to Trade Dividend Stocks?
Now that you have all the lists of the best dividend-paying stocks in South Africa, you may be wondering how to do actual work.
Execution of your learnings is best done with this comprehensive step-by-step process below:
Step 1: Choose a Reliable Stockbroker
A stockbroker will provide you with the platform on which you will execute your trade. The features you can look for when choosing reliable stockbrokers are the following:
- Regulated by Top-tier financial authorities
- Beginner-friendly platforms
- Offers low fees
- Tools that let you track dividends
Step 2: Research the Company’s Dividend Stock Details
As per the studies above, the following compiled lists we share with you are researched thoroughly. The discussed information about dividend yield, market cap, payout ratio, etc., are the following features you should consider before owning a share of the company.
A high dividend yield may be promising, but remember that strong earnings and a sustainable payout ratio must support it.
Step 3: Fund Your Account and Place an Order
Deposit funds into your brokerage account. Once your account is funded, search for the stock (e.g., JSE: EXX for Exxaro), choose how many shares you want to buy, and place a buy order. You can use a market order (buys at the current price) or a limit order (buys only at a price you set).
Step 4: Hold the Stock and Track Dividends
After purchasing, hold the stock through the ex-dividend date to qualify for dividend payments. Dividends are usually paid directly into your brokerage account.
You can choose to withdraw them as income or reinvest them to buy more shares.
Step 5: Monitor Performance and Reinvest Wisely
Keep an eye on the company’s performance, dividend announcements, and market trends.
If the company continues to grow and pay dividends consistently, consider reinvesting your earnings to compound your returns over time.
Frequently Asked Questions (FAQs)
Can you pay dividends monthly?
Yes, some companies pay dividends monthly, but it’s more common in the U.S. than in South Africa. Most South African companies pay dividends quarterly or semi-annually.
Do you pay income tax on dividends?
Yes, dividends are usually subject to a dividend withholding tax. In South Africa, this is typically 20%, which is deducted before you receive the payout.
How to get dividends from stocks?
To receive dividends, you need to buy and hold shares of a dividend-paying company before its ex-dividend date. The Dividend is then automatically paid into your brokerage account on the payment date.
Is Dividend Stock Trading Worth it in South Africa?
Yes, South Africa’s stock market is well rooted with booming sectors of the economy. These include mining, banking, and telecoms, which can even reach a high dividend yield of up to 10%.
However, it’s noteworthy to note that the 20% dividend withholding tax should keep the investors always mindful.
That’s why diversifying your portfolio to manage risks and fluctuations and commodity price swings is important.
In fact, the upcoming stock news break is currently exploring the possibility of 24-hour trading to align with global market trends.
The future of stock trading in South Africa is propelled by these opportunities that pave the way for investors.
This is best practiced with CommuniTrade, which offers free learning courses, live webinars, and just the overall space you need to establish refined groundwork as a stock trader.
