Dividends & Returns
~3 min read
Capital Gains vs Dividends
Two Ways to Profit
Investing in stocks gives you two potential income streams:
1. Capital Gains
This is the profit you make when you sell a stock for more than you paid. Buy at KES 50, sell at KES 70 = KES 20 capital gain per share.
In Kenya, capital gains on shares traded on the NSE are currently exempt from Capital Gains Tax (as of 2024).
2. Dividends
Regular cash payments from the company's profits. Dividends are subject to a 15% withholding tax for Kenyan residents.
Which Is Better?
- Growth investors prefer capital gains — they invest in companies that reinvest profits to grow faster
- Income investors prefer dividends — they want regular cash flow from their investments
- Most investors want a mix of both: some growing stocks and some dividend payers