Building a dividend portfolio with FNBB, ABSA, CA Sales, Sefalana, Choppies, Standard Chartered Bank

Good morning 😃☀️🌞 let’s get into it

We concluded on a 6 part series using the 10 factors that can help determine if a company is good for dividend or value investing.

As my personal decision, I decided that these companies are more suitable for dividend investing than value investing. This may not be your conclusion that’s okay, mine is I prefer them as value investments.

But I would only choose the 3 banks and Sefalana for a reason I will explain later. Remember the 10 factors were a guide, and you can carry out your research on them. I haven’t yet started investing quite yet, because this year my sole purpose was to invest in my skills than in passive income.

This month I was thinking of investing but turned the idea down since I want to pay for TOEFL exams to do my Masters degree on media to further advance Pow Rocket media business.

However this doesn’t stop me from researching and knowing more about the market and avoid silly mistakes I made in the past.

Now I want to build a life I and my family can enjoy without having to wait 30 years or more to have it but instead through 8 year cycles.

I state my assumptions up front, show the end-of-8-year results when I reinvest dividends every year, and then show what happens after I “start all over again” under two options: (A) I cash out and spend it and restart from zero, (B) I cash out and re-invest the proceeds as a lump sum + continue contributions. I also cover tax (withholding on dividends) so the numbers are realistic.

My 8-Year Dividend Cycle (I reinvest dividends and contribute BWP 60,000 / year)

Assumptions (important):

• I contribute BWP 60,000 at the start of each year for 8 years (years 1–8).

• I hold a dividend-focused portfolio (Botswana banks + Sefalana heavy). The blended starting dividend yield = 8.205%.

• The portfolio’s dividend growth (annual) = 4.375%.

• Dividends are paid once per year and I reinvest them immediately (so they buy more shares).

• I assume dividend withholding tax (WHT) = 15% (a conservative, commonly-used base case in my examples). I reinvest dividends net of tax.

• I assume constant share prices (conservative assumption — I model only dividend compounding, not capital gains).

• I ignore broker commissions for simplicity (they’ll slightly reduce net results).

Result — What I have at the end of the first 8 years

• If there were no dividend tax: my portfolio value at the end of Year 8 ≈ BWP 754,146.

• If WHT = 10%: my portfolio value at the end of Year 8 ≈ BWP 720,921.

• If WHT = 15% (base case): my portfolio value at the end of Year 8 ≈ BWP 704,851.

Base-case headline: With realistic tax (15% WHT) and reinvesting every dividend, after 8 years of putting in BWP 60,000 each year, I end up with ~BWP 705k invested (that’s cash I can realize if I sell the portfolio at the end of 8 years).

What I can do after Year 8 — two realistic paths

Option A — I cash out and

spend

the money, then start over contributing 60k/yr from scratch

• If I withdraw and use the ~BWP 705k to build a house, buy a car, etc., and then “start over” (begin again with same 60k/yr contributions), the second 8-year cycle will produce roughly the same outcome as the first cycle (≈ BWP 705k at the end of the next 8 years), because I started again from zero savings each cycle.

Option B — I cash out and

re-invest the entire proceeds

as an initial lump sum,

and

continue adding BWP 60k/yr (a compounding booster)

• If instead I take the BWP 705k I built in Cycle 1, re-invest it as a lump-sum starting capital and then continue contributing BWP 60k/year and reinvesting dividends for another 8 years, the portfolio at the end of Cycle 2 grows dramatically — to about BWP 2,022,876 (this is using the same base-case WHT 15%).

• In plain terms: by re-using the cash as capital and continuing the same savings plan, I supercharge growth because the lump sum earns dividends and those dividends compound on top of fresh contributions.

Which is better?

• If my immediate goal is a one-off dream purchase, Option A is fine (I get the cash).

• If I want to accelerate wealth and earn much larger payouts later, Option B (reinvesting the proceeds and continuing contributions) is far more powerful — it turns an 8-year success into a base for rapid compounding.

Quick numeric summary (WHT = 15% base case)

Why reinvesting dividends helps (plain language)

• Each dividend I receive buys more shares, and those newly bought shares pay dividends too. That’s compound interest in action — and it accelerates the portfolio faster than simply collecting dividends in cash.

• Even when tax (WHT) is taken, reinvesting the net dividend still buys additional shares and produces more future dividends. Over 8 years that difference becomes meaningful (in my numbers, reinvesting with 15% WHT gives me ~BWP 40k more final invested value than if I had collected dividends in cash each year and withdrawn them at the end).

Practical notes & taxes (what I must check)

• I used 15% WHT on dividends as the base-case. If my personal / company tax situation or a tax treaty gives a lower rate (e.g., 10%) my net outcome improves. I should confirm the exact rate with BURS or my tax advisor.

• I assumed no capital gains tax in the examples (some markets don’t tax capital gains; others do). If there’s a capital gains tax when I sell, that will reduce the cash I end up with when I liquidate the portfolio. I must check local rules and plan accordingly.

• Broker fees and stamp duty (if any) reduce final amounts slightly — keep those small by using low-fee brokers and buying in blocks.

Practical recommendation for “8-year payouts” strategy

1. Decide my priority: Do I want a recurring 8-year cash milestone I spend (Cycle A), or do I want to compound and build a growing machine (Cycle B)? If I want bigger lifestyle lifts later, favor Option B.

2. Stick to the plan: Contribute BWP 60k per year consistently and let dividends compound during each 8-year accumulation phase.

3. If I want cash for a big project at Year 8, consider a hybrid: reinvest dividends for the first 6–7 years, then in Year 8 switch to collecting dividends (or sell a portion of the portfolio) to avoid market timing risk.

4. Record the tax impact: plan for WHT and any capital gains taxes to ensure net cash meets the project cost.

5. Use Cycle 1 as a test run: take the cash, enjoy a meaningful family goal (holiday, deposit on a house), then decide whether to re-invest the remainder as a lump for Cycle 2 (my choice will determine how fast my wealth compounds going forward).

If I want, I can now:

• produce the full year-by-year table for Cycle 1 showing contributions, dividends paid (gross and net), reinvested amounts and portfolio value each year (useful for the newsletter), and

• create two short visual charts: (1) portfolio value with reinvestment vs no reinvestment across 8 years, and (2) Cycle 2 outcomes (start-from-zero vs reinvest-proceeds).

I hope you can see where I’m going here. All this is easier if I have P5000 to spare for the P60k yearly contribution or P2500 which my wife would contribute another P2500 every year with me to build that. Hence that’s why I’ve been heavy on reinvesting in my craft this year since I haven’t made enough to have 5K to spare on a monthly basis. I figured that the best way is to raise my earned income way higher for me to be comfortable doing that.