lAs RoI outperforms GDP growth, inflation
lReturns not reflecting on share price-Shareholders
lDangote Cement takes lead with N340.8bn
By Peter Egwuatu
Stock market investors are set to enjoy a 47.1 per cent YoY increase in dividend earnings to N1.1 trillion for the financial year ended 2021, up from N732.9 billion the preceding year 2020.
The Return on Investment, RoI, which outperformed the economy by 43.7 percentage points, follows the proposed dividend payout from 23 of the companies listed on Nigerian Exchange Limited, NGX.
Capital market operators attributed the improved RoI to the economic recovery witnessed in 2021, resulting in Gross Domestic Product, GDP growth of 3.4%, Year on year, YoY, in 2021, the fastest in seven years. The last time Nigeria’s economy grew more than 3.4% was in 2014, when the real GDP expanded by 6.22% YoY.
Financial Vanguard investigation shows that as at the close of business on Friday, 23 companies on the NGX across seven sectors namely: Consumer Goods, Financial services, Industrial goods, Oil and Gas, Services, Healthcare and IT, have declared N1.077 trillion as final dividend payout for the year ended December 31, 2021.
This is against 58 companies across ten sectors of quoted companies on the Exchange that paid out N732.9 billion in 2020.
The sectors and number of companies are: Financial services 21, Consumer Goods 7, Industrial Goods 6, Oil & Gas five, Healthcare 4, Services 4, ICT 3, Natural resources 2, Construction Real Estate 2, Agriculture 2 and Conglomerates 2.
Operators emphasised that dividend has remained one of the key factors that traditionally drive stock market activities and aids investment decisions towards stocks across the globe, and Nigerian bourse is not an exception.
Dividend payout by companies
For the period under review, under the Consumer Goods sector, Vitafoam paid N1.876 billion, representing N1.50 per share. Dangote Sugar Refinery proposed a final dividend of N12.147 billion or N1.00 per share, while Nestle Nigeria declared a N20.213 billion dividend or N25.50 per share.
NASCON Allied Industries and Nigerian Breweries, NB are set to pay dividend of N1.060 billion and N9.691 billion, representing 40 kobo per share and N1.20 per share respectively, PZ Cussons is to pay N992. 620 million, representing 25 kobo per share respectively.
Under the Financial Services sector, shareholders will receive dividend of N9 billion from United Capital, N1 billion from African Prudential, N79.464 billion from Guaranty Trust Holding Company (GTCO), N87.910 from Zenith Bank, N27.360 billion from United Bank for Africa (UBA), N35. 545 billion from Access Bank, and N3.24 billion from Custodian Investment.
Also, Dangote Cement and Lafarge Africa listed under Industrial Goods sector have proposed a final dividend of N340.810 billion, representing N20 per share and N16.108 billion or N1 per share, respectively.
Seplat Energy plans to pay a dividend of $0.426 cent per cent, resulting in a total payout of N250.677 million in naira, while Transcorp Hotels, listed under Services sector, declared dividend of N716.977 million or seven kobo (N0.07) per share.
Neimeth International Pharmaceuticals have proposed N132.941 million final dividend or seven kobo (0.07) per share, UPDC REIT proposed dividend of N3.24 billion, representing 18 kobo per share while MTN Nigeria Communications (MTNN) declared a final dividend of N8.57 per share, amounting to N174.442 billion.
Others include: Union Homes REIT N477 million, Cadbury Nigeria N449 million and Cornerstone Insurance N908 million.
Top five dividend payout
Dangote Cement led the top five dividend paying companies in the year under review with N340.82 billion followed by Seplat Energy N250.677 billion. MTN occupied the third position recording N174.442 billion followed by Zenith Bank with N87.910 billion and Guaranty Trust Holding with N79.464 billion.
Lowest five dividend payout
Neimeth led the five lowest dividend payout in the year under review with N132.941 million followed by Union Homes REIT N477 million. Transcorp Hotels followed with N715 million while Cornerstone Insurance and Cadbury followed with N908 million and N939 million respectively.
While commending the increased dividend pay-out, market analysts noted dividend-paying stocks is very important to income investors for many reasons, saying that the reason is that dividend payment plays a role in stock valuation.
“Beyond valuation, dividend paying stocks can be a good source of stable income streams. Many investors will want to invest in companies with a history of growing dividends,” they said.
Commenting as well, shareholders commended impressive earnings by listed companies and dividend payout amid domestic and global macro-economic shareholders challenges.
Speaking, President, Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie: “The listed companies have shown resilient performance despite numerous challenges in the economy. Zenith Bank has surpassed analysts’ expectations with profit and dividend payout to investors, the same for GTCO, UBA, among others.”
Okezie however questioned Dangote Cement’s N20 per ordinary share dividend to investors, maintaining that the cement manufacturing could have rewarded investors better for 2021 financial year.
On his part, Managing Director/CEO APT Securities and Funds Limited, Mr. Garba Kurfi commended listed companies for posting impressive results and accounts for 2021, expressing concerns that the declared dividend by these companies did not reflect in the trajectory of the stock market.
He said: “These companies have declared impressive dividend payout to investors but I do not know why the stock market did not respond to dividend payout by Dangote Cement, Zenith Bank, among others. The likes of GTCO and UBA released their audited accounts and I am yet to see stock price appreciation.
“Take for instance, Lafarge Africa last year was trading at N31.00 and declared N1.00 per ordinary but this year, the company declared N2.00 and trading at N24.00 per share. The dividend by these companies has not been reflected in our domestic market.”
However, Chief Executive Officer, Wyoming Capital & Partners, Mr. Tajudeen Olayinka stressed the need for investors to investigate if these companies were paying from the reserve or current earnings reported on the NGX.
“For those companies that have proposed a dividend, we praise their effort. If a company is paying from current earnings, it shows effective management despite the challenges. What some of these companies are paying as dividends is substantial which is good for their stock prices.”
He added that: “It is excessive if a company is paying over 10 per cent yield on its dividend to shareholders and it means these companies are operating at a higher cost per capital. When you have a functional market where companies are doing well, I don’t expect a company to pay more than five per cent yield on dividend to shareholders.
“That was the level our domestic market was in 2007 before the global economic meltdown. If a company is able to pay at least five per cent yield, it means they will be able to raise money at a low level per capital.”