The ultimate dividend payout for the year ending December 31, 2021 would be ₦770.783 billion to shareholders of Dangote Cement Plc and 15 other firms listed on the Nigerian Exchange (NGX) Limited.
Dividends have long been one of the primary drivers of stock market activity and aiding investing decisions in equities around the world, and the Nigerian stock exchange is no exception.
A dividend is a payment given by a company to its shareholders, usually in the form of a profit distribution. When a company makes a profit or a surplus, it has the option of reinvesting the profit in the firm (retained earnings) or paying a portion of the profit as a dividend to shareholders (dividend).
MTN Nigeria Communications (MTNN), Zenith Bank, Guaranty Trust Holding Company (GTCO), United Bank for Africa (UBA), Nestle Nigeria, Lafarge Africa, Dangote Sugar Refinery, Nigerian Breweries, United Capital, Vitafoam Nigeria, NASCON Allied Industries (NASCON), Africa Prudential, PZ Cussons Nigeria, Transcorp Hotels, and Neimeth International Pharmaceuticals are among the other businesses.
Dangote Cement’s board of directors suggested a final dividend of ₦340.82 billion, or ₦20 per share, for the period under review, in accordance with its dividend policy.
Zenith Bank, GTCO, and UBA recommended final dividends of ₦2.80, ₦2.70, and 80 kobo, totalling to ₦87.91 billion, ₦79.46 billion, and ₦27.36 billion, respectively, while MTN announced a final dividend of ₦13.12 per share, equivalent to ₦174.442 billion.
Nestle Nigeria would pay a final dividend of ₦20.213 billion, or ₦25.50 per share, while Lafarge Africa and Dangote Sugar Refinery have recommended dividends of ₦16.108 billion and ₦12.147 billion, respectively.
Nigerian Breweries, United Capital, Vitafoam, NASCON, Africa Prudential, PZ Cussons, Transcorp Hotels, and Neimeth International Pharmaceuticals are among the companies that have paid out dividends of N9.69 billion, N1.5 billion, ₦1.88 billion, ₦1.06 billion, N1 billion, N992.62 million, N716.98 million, and N132.94 million, respectively.
UBA, Total Nigeria, Meyer, Custodian Investment, NNFM, and Consolidated Hallmark Insurance all paid interim dividends of 20 kobo, ₦4.00, ₦1.50, 10 kobo, 15 kobo, and 0.02 kobo per share, for a total of ₦6.840 billion, ₦1.358 billion, ₦0.797 billion, ₦0.588 billion, ₦0.267 billion, and ₦0.214 billion, respectively.
Dividend-paying stocks are significant to income investors for a variety of reasons, according to market analysts, one of which is that dividend payment influences 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 dividend,” they said.
Mr. Garba Kurfi, market analyst and managing director/CEO of APT Securities and Funds Limited, praised listed firms for their great results and accounts for 2021, but expressed worry that the declared dividends by these companies were not reflected in the stock market’s trajectory.
These firms, according to him, have declared big dividend payouts to investors, but I’m not sure why the stock market hasn’t reacted to dividend payouts by Dangote Cement, Zenith Bank, and others. Despite the fact that companies like GTCO and UBA submitted their audited financial statements after the conclusion of trading last week, I have yet to see stock prices rise.
“Take for instance, Lafarge Africa last year was trading at ₦31 and declared ₦1.00 per ordinary but this year, the company declared ₦2.00 and trading at ₦24.00 per share. The dividend by these companies has not reflected in our domestic market”.
Analyst and CEO of Wyoming Capital & Partners, Mr. Tajudeen Olayinka, urges investors to check to see if these companies are paying from reserves or from current earnings reported on the NGX.
“For those companies that have proposed 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 dividend is substantial which is good for their stock prices,” he said.
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 do not 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”.