Kenya’s 10 Best Stocks of the Past 10 Years

The Nairobi Securities Exchange had a tough go of it in 2015, but investors have reaped exceptional rewards from long-term investments in stocks ranging from banking to agriculture. Here’s a countdown of the top Kenyan stocks over the past 10 years.

Let’s not sugarcoat it.Nairobi, the capital city of Kenya

The Nairobi Securities Exchange (NSE) had a dismal year in 2015, dropping 10.6% (21.5% in US dollar terms), and market watchers remain decidedly unenthusiastic about the prospects for Kenyan stocks in the year ahead.

When bearish sentiment prevails, it’s often difficult to see just how profitable a long-term investment in stocks can be.

So let’s turn back the clock ten whole years, to the early days of 2006.

Kenyan voters had just rejected a proposed new constitution, a disastrous drought was creating misery in the north, and the Anglo Leasing scandal had just broke. The intervening years have brought devastating election violence, a global financial crisis, and horrific terrorist attacks.

In hindsight, it seems like an absolutely dreadful decade to have been invested in Kenyan stocks.

Yet throughout that time period individual companies have posted some sensational performances. A dozen stocks more than tripled in value during that time period, creating a healthy nest egg for their long-term shareholders.

Here’s a countdown of the NSE’s five best performers over the past ten years.

5. Kakuzi
(10yr Rtn: +560.4%)

Ten years ago, this diversified agricultural producer was saddled with heavy debt and reported an earnings loss due to drought and low tea prices. But over the past decade, the tea price has nearly doubled and the company invested heavily in lucrative new crops like avocado and macadamia nuts.

Management also sold off one of its tea plantations and retired the company’s interest-bearing debt. The combined impact of all these factors has been consistent profitability.

Undervalued land assets along the Thika Road added to the surging share price’s momentum.

And so did activist investor, John Kimani. Kimani, who was born and raised on Kakuzi farm, has been steadily buying shares of the relatively illiquid stock in an effort to represent the rights and interests of the company’s workers and neighbors. His stake in the company has risen from virtually nil ten years ago to a whopping 25% of outstanding shares today.

4. Diamond Trust Bank
(10yr Rtn: +663.9%)

While its larger peers, Equity Bank and KCB, may get most of the headlines, Diamond Trust is arguably Kenya’s best-managed bank. The past ten years saw it embark on an ambitious expansion drive that increased its branch network from just five in 2005 to well over 100 today and extended its reach beyond its Kenyan home base to Burundi, Tanzania, and Uganda.

So, far it looks like the moves are paying off. Customer deposits have increased in excess of 20% in each of the past five years, while non-performing loans have been held to less than 2% of total lending.

The share price has benefited from steady purchases from Pakistan’s Habib Bank. In 2013, Habib announced its intention to increase its stake in DTB from 11% to 26% through purchases on the open market by the end of 2018.

3. Centum
(10yr Rtn: +676.3%)

The comparisons to Berkshire Hathaway are perhaps a bit premature, but if this investment holding company continues to grow at the rate it has over the past ten years, it won’t be long before Chairman Chris Kirubi and CEO James Mworia become Kenya’s answer to Warren Buffett and Charlie Munger.

Starting from small holdings in listed companies, Centum now boasts controlling stakes in firms active in consumer goods, manufacturing, banking, and real estate. Look for it to take on an even more instrumental role in the Kenyan economy over the next ten years through big investments in energy, healthcare, and education.

2. Jubilee Holdings
(10yr Rtn: +743.6%)

Kenya’s largest insurance company has given its shareholders plenty to celebrate over the past ten years. In that time period, the company’s grown its net insurance premium revenue by an astounding 660%.

Savvy investments in Diamond Trust Bank, real estate, undersea fiber-optic cables, and energy projects have augmented the insurance income and positioned it to benefit directly from some of the most promising sectors in the region.

The company now sells its policies throughout East Africa, is on the verge of launch in the DRC, Madagascar, and Ethiopia, and is eyeing expansion opportunities in West Africa, too.

1. Limuru Tea
(10yr Rtn: +1158.0%)

A true home run stock. Lucky shareholders of this 677 acre tea plantation just northwest of Nairobi saw the value of their shares rise more than eleven-fold this past decade.

Rising tea prices certainly didn’t hurt the company’s valuation, but the real impetus behind the stock’s rise is real estate. Limuru’s rolling hills are also highly coveted by property developers. With its pleasant climate and convenient location just 40 kilometers from the capital’s central business district, the plantation is ideally situated for high-end property developments. But if you’d like to own a piece of the company, you’d best be patient. Unilever Tea Kenya owns 52% of shares and the remainder rarely trades even after a 2:1 share split in June this year.

Who were the other top performers on the NSE? The chart below shows the top ten Kenyan shares since December 31, 2005.

10 Best Kenyan Stocks of the Past Decade

Company Return (12.2005 – 12.2015)*
1. Limuru Tea 1158.0%
2. Jubilee Holdings 743.6%
3. Centum Investment 676.3%
4. Diamond Trust Bank 663.9%
5. Kakuzi 560.4%
6. ARM Cement 425.6%
7. Crown Paints 381.5%
8. Equity Bank 314.5%
9. KCB Bank 301.1%
10. BAT Kenya 284.8%
* excludes dividends  

[Disclosure: At date of post, I (Ryan) held a beneficial interest in shares of KCB Bank and Centum Investment Holdings.]

44 thoughts on “Kenya’s 10 Best Stocks of the Past 10 Years”

    1. Thanks, Pius! And, yes, I should be disclosing my position in any stocks mentioned. Will add disclosure at end of article straightaway.

    1. Their returns really are fantastic, and this figure doesn’t even include dividends. Congrats for picking up on the opportunity!

  1. 10 year returns have actually been higher that this in Kenya. I assume a direct price percentage change was applied? This might be misleading because if you factor in share splits, bonus issues and rights issues, counters have generated as high as 5000% over the last 10 years!

    1. Good point, Linet. The returns were calculated using data from Thomson Reuters, and they typically adjust prices for splits and bonus issues, but they may not catch all of them.

  2. Hi Ryan,
    Are the returns in US dollar terms or in shilling?
    I’m not sure whether I should keep my current investments on the NSE especially because of the Chinese economic downturn and the FED interest hike. Do you still recommend Kenyan stocks on a 3-5 years investment horizont?
    Thanks
    Simon

  3. I found your site while investigating stocks in Botswana but was really impressed by Centum. Looks like a rare opportunity to purchase a fast-growing company below NAV.

  4. Hello Ryan, ad like to appreciate the good work you doing over here. Am sure many a people are benefiting. My request is that you do write on undervalued stocks in Kenya preferably those that have a better chance of accruing profits in 10yrs to come thanks.

    1. Thanks, Gifton. Next month I’ll be launching a newsletter especially for Kenya investors. Each monthly issue will include a stock that I believe will outperform the market over the next 5-10 years. Stay tuned!

  5. hi Ryan am Kenyan am new in the stock market and i found your thoughts insightful thanks.
    What is a good point to start investing am thinking of good companies that’s I can invest long term .considering good dividend returns .

    1. Thanks, Elizabeth. Great to hear of your interest in beginning to invest in stocks.

      If you have some money that you will not need over the next five years, I’d begin by selecting a handful of companies that you have some experience with and that have grown their profits consistently over time (e.g. Safaricom). I would then begin investing in them systematically over time. For example, you could invest Ksh5,000 in Safaricom every month for the next year. This allows you to begin getting experience investing without worrying too much whether you are paying a good price. When the price is high, your Ksh5000 will buy you fewer shares, and when the price is low, it will buy you more shares. This approach is called “cost averaging.” At the end of the year, you’ll likely end with a fairly good average price for your shares. As you learn more about how the markets work, you’ll discover new ways to evaluate the current price of a stock, and become more comfortable taking larger bets on companies when the price looks low.

      You might also be interested in my new Stock Scout: Kenya newsletter, which launches later this month. The newsletter will include my top Kenyan stock pick in each monthly issue, and it will feature a number of solid dividend stocks.

      Happy investing!

      1. great for how you responded to Elizabeth… am a currently a 3rd year student and would wish to start investing in shares.. l like the ‘cost averaging method’ and also your magazine

  6. Hello Ryan,
    You are doing a good job keeping us informed on smart investing and investments.
    I am a newbie in investing. I am interested in the Kenya stock market. Any tips will be appreciated. Happy New Year 2017!
    Regards,
    MH

  7. The information is so helpful and i have managed to do exactly what you have advised though at a lower not of ksh 2000.

  8. Ryan has been so helpful to me.Im building my longterm portfolio of select NSE stocks which i hope to rope market beating returns.All these through learning from good guys like him and others.I learnt “cost averaging” last year through an interective social site http://www.wazua.co.ke im trying to beat the market with it.Each of the company i have in my portfolio,i have its average buying price (abp) which i revise everytime i buy new shares.I have been trying to buy below my “abp” to make sure it stays below the market price.The challenge im facing is that some market prices stay above my abp for so long yet im desperate to buy more.I have been tempted to buy above my abp but im not sure whether it will be the right move or will it be ‘chasing a stock’. For example,my average buying price for safaricom is 16.60.but the price has been above 18.00 for so long making me frustrated.i would hope to accumulate more at below 16.00 which looks like its unlikely.How should a long term investor play the cost average style effectively? im a long term investor,hoping to pass it on to my child and grand child.Will appreciate your input Ryan.

  9. Hi. Ryan just disposed my kenol kobil shares and am thinking of buying into carbacid. Do you think its a good buy or what would you recommend.

    1. Hi Jose,

      Congrats on what I’m guessing was a profitable KenolKobil investment. I do like Carbacid at today’s price (Ksh12.75) and think it stands a good chance of reporting strong earnings based on the value of its investment portfolio. But it’s important to keep in mind that this is a relatively small company and we don’t have much visibility into what investments it actually holds. Thus, there’s a chance that its next earnings could be disappointing.

      If I were to buy just one Kenyan stock today (18 September 2017) to hold for the next five years, it would be Safaricom (Ksh24.25). Big, profitable company that churns out cash and becomes more entrenched in Kenyans’ daily lives with each passing year.

      Disclosure: I have a beneficial interest in Safaricom shares.

  10. I am a second year university scholar and new to the stock exchange market. I would like to start investing tho i do not know where to begin help.

  11. Hey Ryan, i want to venture into investing in stocks. Am researching on how the investment works. could you please take me through

  12. Hi Ryan

    what would you say about the performance and growth of agricultural sector at the NSE as of the last 5 years(2018-2013)

    1. Share performance was mixed with stocks like WTK and Sasini ending up pretty much where they started. But Kakuzi was excellent, more than quadrupling in value during the period.

  13. Hello Ryan,

    Great post! Would you mind if I asked how you settled on those returns, e.g. Limuru Tea – 1158.0%, Jubilee Holdings – 743.6%, Centum Inv. – 676.3%, etc. In other words, what metrics did you take into consideration?

    1. Thanks, Charles. The returns were determined by dividing the share price as of the end of 2015 by the share price at the end of 2005. Dividends were not included in the calculation.

Leave a Reply

Your email address will not be published. Required fields are marked *