In emerging markets such as Egypt, it is difficult to consider a long-term investment and be confident that the company will continue to grow at a rate that is competitive with interest rates and inflation. As a result, the majority of Egyptians prefer to invest in safe long-term bonds that provide a return of up to 17.25% per year. Dividends, on the other hand, are the unsung hero of the Egyptian stock market.
There are several companies in the EGX that give their shareholders the pleasure of enjoying the profits of their investment, ranging from tobacco giant Eastern Company (EAST) to banks such as Credit Agricole (CIEB) and Faisal Islamic Bank (FAIT). There are numerous factors to consider when selecting a dividend stock; one wishes it could be as simple as opening your NBE app and selecting the highest percentage yield. When investing in a dividend stock, the most important question to ask is, “Can this company continue to pay me consistent dividends at this rate while also having funds left over for growth?” And in the case of Oriental Weavers (ORWE), this is highly probable.
Oriental Weavers was founded in 1979 (and was listed on the EGX in 1997 for 1 EGP/Share) and has grown to become a homegrown manufacturing behemoth with operations on three continents. They have demonstrated resilience and adaptability in the face of turbulence in the Egyptian market and the rise of the e-commerce industry. ORWE has successfully expanded their target market over the years by exporting to 5 continents, generating 65% of its revenue from abroad as of 9M 2022. This type of expansion can only be aided by the company’s vertical integration business model and strong relationships with global retailers and hospitality titans.
A company with this type of business model and diverse revenue sources can only be classified as a blue-chip stock on the EGX. As is the case with many blue-chip stocks, dividends are commonly paid. ORWE has paid dividends to shareholders on a continual basis since 2006, with dividend yields ranging from 8 to 14%. Allowing shareholders to either enjoy their profits or compound their investment for future use.
Investing in a blue-chip stock like ORWE as a long-term investment can provide you with growth and dividends, allowing you to compete with current interest rates by compounding your investment. Furthermore, as Egypt seeks to strengthen its exports, and with the help of the Egyptian pound’s devaluation, look no further than ORWE (or a similar manufacturer with large exports and a healthy dividend return) to provide you with a safe long-term growth rate.
