Despite stock prices trending down as interest rates remain elevated, the dividend yields on some securities on the Jamaica Stock Exchange (JSE) have increased in recent times.

There are two general ways investors make money on the JSE: capital appreciation and dividend payments. Capital appreciation refers to buying a stock at a lower price and selling it at a higher price. Dividends are a form of income that an investor gets for owning shares of a company at a specific period called the record date.

The dividend yield refers to the total dividends paid over a one-year time frame divided by the stock price.

Take Carreras’ stock price, for example, which up to July 28 was $8.12 with the trailing 12-month dividend payments totalling $0.76. This means that if you own $100,000 worth of Carreras Limited, which currently has a 9.36 per cent dividend yield, one will receive a gross amount of $9,360 over a one-year period.

Since Carreras is a Jamaican company paying dividends to Jamaican residents, Jamaican shareholders are subject to a 15 per cent withholding tax which would result in a net amount of $7,956. However, when a company based in another Caricom territory pays dividends to a Jamaican resident, they are not subject to any withholding taxes under the Caricom Double Taxation treaty.

Thus, Sterling Investments Limited, Sygnus Credit Investments Limited and Eppley Caribbean Property Limited SCC – Value Fund shareholders would not be subject to withholding taxes on their dividends. With dividend yields of 5.24 per cent and higher, these shareholders would receive the gross amount straight into their wallets.

The Main Market typically has the older, more established companies which tend to have higher dividend yields and more stability in payouts to shareholders. However, the current economic environment has seen different companies pull back on dividend payments as they look to retain more capital for their future plans.

The Junior Market has companies which are still going through their own growth phases and so aren’t likely to be large dividend-paying companies, especially from a dividend yield standpoint. Despite this relative constraint, Mailpac Group Limited and General Accident Insurance Company Jamaica Limited (Genac) have dividend yields above five per cent. Both Mailpac and Genac have seen their prices trend down from peak prices of $2.60 and $6.15, respectively, in the last year.

On the USD market, Sterling and Sygnus Credit reign supreme with dividend yields above four per cent. Productive Business Solutions Limited, which is the only company not cross-listed on the Main Market, boasts a dividend yield of 2.24 per cent.

Rising interest rates have also benefited the holders of variable rate preference shares. An example of this is JMMBGL7.50, which had a rate of 5.34 per cent in 2022 and 9.30 per cent in 2023 due to the rise in treasury bill yields. This has resulted in the dividend yield moving to 7.63 per cent.

JMMBGL7.25c currently posts the highest dividend yield among Jamaican-dollar preference shares at 10.52 per cent. This is because of the interest rate being reset to 9.9423 per cent for 2023 and the price trading at $1.89, just below the maturity price of $2. This preference share matures in March 2025, which means that there is one more rate reset to come.

PBS9.25 currently has the highest dividend yield among US-dollar preference shares of 7.40 per cent, which is due to the stock price trading at US$12.50 — above the issue price of US$10. Two of the other USD preference shares trade below their maturity prices while the other three trade at a premium, which has pushed down the yield on the securities.

Of the 98 listed companies covering 104 listed securities on the JSE, 69 securities have paid a dividend over the last year with the other 35 listed securities not paying a dividend over the last year. The average dividend yield among the listed securities that pay dividends was 2.77 per cent.