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Reactive power compensation on radial distribution systems is a challenging issue. Electric power distribution systems are being bedeviled by high active power loss and severe voltage violation especially on the buses that are far from distribution substations. This article presents a two‐stage approach for sizing shunt capacitors and identifying the locations where their placement would be most beneficial within radial distribution systems. A multiobjective function capturing real power loss minimization and bus voltage profile enhancement was formulated and weighted approach was engaged to transform the function into single objective one. While backward forward sweep approach was used for the load flow analysis, loss sensitivity factor was employed to predetermine suitable sites for capacitor installation, with the optimal sites and sizes determined using cuckoo search algorithm. This approach was implemented on IEEE 15‐bus and Yale 17‐bus/11 kV feeder. Results obtained using the method was thereafter compared with those obtained through other methods as obtained from literature and the comparison shows that cuckoo search algorithm outsmarts others. Significant reduction in real power loss, coupled with appreciable enhancement in voltage profile, is achieved on the Yale 17‐bus/11 kV feeder. The approach is therefore viable for addressing reactive power compensation problems confronting practical radial distribution systems. [ABSTRACT FROM AUTHOR]