Should you buy Safaricom shares after Mpesa soars?

Should you buy Safaricom shares after Mpesa soars?

Safaricom’s Mpesa processed Ksh405 billion in merchant payments in the six months through September 2020, giving it 85% share of Kenya’s cashless payments market in that category compared to 15% share of payments card companies.

The Mpesa platform handled more than 155 billion transactions in that period, rising 246 billion transactions in a similar period last year. The Mpesa business has become a crown jewel for Safaricom and its success bodes well for Safaricom shares.

Safaricom’s Mpesa revenue

People use the Mpesa to buy for purchases. Moreover, people use Mpesa to send money to family and friends. Additionally, households use Mpesa to pay utility bills like electricity and water. Safaricom is expanding the Mpesa platform to support more transactions and make it more money.

The Mpesa business generated Ksh36 billion in revenue for Safaricom in the six months through September, representing 29% of the company’s total revenue for that period. Safaricom is currently foregoing billions of shillings in Mpesa revenue as a result of waiving fees on transfers up to Ksh1,000. Safaricom expects to resume normal Mpesa charges in January, which should boost its revenue.

Is Safaricom a good investment?

Although the Covid-19 pandemic has dealt a major blow to businesses across board, Safaricom remains the most profitable companies in Kenya. The company hauled a Ksh33 billion profit in its fiscal half-year ended September 2020. The profit dropped 6% from a similar period last year because of pandemic impacts, especially the waiving of Mpesa transfer charges for certain amounts.

Safaricom shares its success with investors. The company distributes a portion of its profit as dividend to shareholders. Safaricom has paid dividends every year since it went public and it stands out as one of the best companies to invest in Kenya for reliable dividend.

How to buy Safaricom shares

Safaricom shares trade on the Nairobi Securities Exchange under “SCOM” ticker symbol. The shares currently trade for Ksh32 apiece. If you want to buy Safaricom shares, you’ll first need to open a CDS account with a stockbroker or investment bank of your choice. Once you open the account, you’ll decide the number of Safaricom shares to buy and place your order.

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