Lots of people keep asking me about SACCOs, so here’s a clear comparison of the three most talked-about ones: Mwalimu SACCO, Stima SACCO, and Tower SACCO.
I will not focus on interest on savings (even though all three offer returns above 10 percent. Instead, I’ll focus on dividend income.
1). Mwalimu SACCO
Asset base: Sh76 billion (largest among the three)
Average profit (5 years): Sh0.9 billion – Sh1.2 billion range
Dividend payout: 13 percent consistently
Mwalimu is the most stable and the largest by scale. It is predictable and has maintained a steady 13% dividend return over time.
2). Stima SACCO
Asset base: Sh75 billion
Average profit (5 years): Sh2 billion+
Dividend payout: 12 percent to 15 percent range (varies by year)
Stima SACCO is efficient in profitability. Its dividend payout is moderate and stable.
3). Tower SACCO
Asset base: Sh35 to Sh38 billion
Average profit (5 years): Sh0.8 billion to Sh1.1 billion
Dividend payout: 20 percent (last 2 years)
This one has an aggressive dividend policy.
Despite having a smaller asset base and lower profits compared to Mwalimu and Stima, it has recently paid 20 percent dividend payout which is quite seriously high.
It is worth noting that 70 percent of SACCOs’ assets are their loan book, and as such there is a bit of fluctuation.
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Why SACCO dividends are attractive
First, they are calculated on share capital, unlike stocks which are calculated on market price.
If you invest Sh2 million in a SACCO with a 13 percent dividend payout, you will earn Sh260,000 annually.
Dividend payouts are taxed at only 5 percent, which is low compared to your favorite MMFs and your special funds which are taxed at 15 percent.
Now here’s the interesting part:
Assuming Tower maintains the 20 percent payout, if you compare it to equities like Equity Group over the last 5 years (capital gains + dividends combined), it cannot consistently average 20 percent annually.
However, Tower has only delivered this for about two years, so we cannot tell if it will sustain it.
This means that if you invested Sh5 million in Tower at a consistent 20 percent payout and fully reinvested the dividend income, in 5 years you would be in the range of Sh12.4 million to Sh13 million.
Important risk factor: liquidity
Unlike listed equities on the NSE, SACCO shares are not freely tradable. To offload, you will need to find a buyer or exit membership, and of course there are terms and conditions.
Final take from a risk-reward perspective
Mwalimu — safest, stable, predictable (13 percent)
Stima — strongest fundamentals and profitability
Tower — highest yield (20 percent), but also highest uncertainty
Muthoni Njakwe is an accountant and the author of personal finance book Her Shilling, Her Power: A Woman’s Guide to Financial Freedom.
