• Thursday, March 28, 2024
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Firms increase dividends 15.31% to N597.86bn in 2018

Dangote Cement

Dividend payment from Nigeria’s largest companies continued to climb in the last quarter of 2018 as they wooed shareholders even amid a tough and unpredictable macroeconomic environment.

Among index members, 47 companies declared N567.86 billion cash dividends, a 15.31 percent increase from N493.78 billion paid to owners in 2017.

Dangote Cement Nigeria plc, the largest producer of the building material, accelerated its dividend payment to N16 per share (or N242.02 billion), a 35.25 percent increase from the 2017 figure.

Julius Berger jacked up dividend payment by 96.67 percent to N2 per share or N2.60 billion for the 2018 financial year, from N1 per share or N1.32 billion in 2017. The most capitalised construction company was grappling with delay in the passage of the budget, huge debt owed it by the Federal Government, and a severe dollar scarcity.

However, Cement Company of Northern Nigeria (CCNN) plc’s dividend payment fell by 68.62 percent to N5.25 billion from N16.75 billion as at 2017.

In the consumer goods space, Unilever increased dividend by 200 percent to N8.61 billion or 1.50 per share, from 50k per share in 2017.

Nestle Nigeria plc hiked dividend payment by 40 percent to N30.51 billion in the period under review as against N27.79 billion it declared in 2017.

Different factors drove the rise in some of these companies’ dividends.

For Unilever the improvement was because it sold its Blue Band, the margarine business.
If not for the sale of a segment, dividend would have been slashed, according to Ifedayo Olowoporoku, consumer goods research analyst at Vetiva Capital Management Limited.

“Nigerian Breweries had a bad financial year even if they maintained 100 percent payout.

Companies have started the year on an unimpressive note and it could get to half year before they start to garner momentum since consumers’ wallets are squeezed,” said Olowoporoku.
Ifeoma Onyeka, an industrial goods analyst at Vetiva, said that while Dangote Cement magnified dividend per share compared to CCNN, the latter has paid more dividends from distributable profit to shareholders.

“There were impressive payments from the cement and industrial goods sector,” Onyeka said.
For the NSE Banking 10 Index – the most capitalised lenders – dividend payment has been flat, as they continue to protect their capital against headwinds.

Zenith Bank’s dividend payment is up 2.04 percent to N78.50 billion in 2018 from N76.93 billion the previous year.

Guaranty Trust Bank’s dividend payment was flat at N72.10 billion while United Bank for Africa’s was flat at N22.30 billion.

“There is a rule by the Central Bank of Nigeria (CBN) that states the amount they can pay out as dividend,” said Emeka Ucheaga, analyst at ED Finance and Strategy.

The banking sector has the highest dividend yield with Zenith Bank yielding 14.38 percent.

Dividend payment for the insurance companies in the country was flat, but Leadway Assurance plc bucked the trend. The largest insurer by revenue, profit, and asset accelerated payment by 258.67 percent to N5.38 billion for the year ended 2018, from N1.50 billion in 2017.

Financial performance of the largest firms in Nigeria grew slowly in the first quarter as weak revenue and rising operating costs crimped profitability.

For instance, the cumulative revenue of the largest listed companies in the country increased by a mere 5.05 percent to N2.48 trillion in March 2019, from N2.36 trillion as at March 2018.

Combined net margins followed the same slow growth trajectory as it rose by 4.65 percent to N379.22 billion in the period under review, from N362.35 billion a year earlier.

Expectedly, cumulative average margins were flat at 15.73 percent, which means firms are beleaguered by operating inefficiency.

“Policymakers were distracted in the first quarter as the country prepared for elections but when they settle down to the business of the day, then the economy may begin to pick, said Johnson Chukwu, managing director and CEO, Cowry Asset Management Limited.

BALA AUGIE