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Cement, banks, oil & gas top as listed firms pay N783bn dividends

Revisiting MSCI equity indexes review

For investors interested in high dividend paying stocks on the Nigerian Stock Exchange (NSE), equities listed in three sub sectors hold all the aces as they accounted for over eighty percent of the total dividends declared year to date on the NSE.  The three sub sectors are building materials, banking as well as oil and gas. Stocks listed in the aforementioned sub sectors paid cumulatively N689.13 billion representing 88 percent of the N783 billion dividends declared in the on-going dividend season which is for the 2018 financial year.

Dangote Cement, Cement Company of Northern Nigeria (CCNN) paid N277.91 billion as dividends to shareholders, and thus accounted for 35.5 percent of the dividends paid year to date on the NSE. Dangote Cement alone accounted for the largest chunk of the dividends paid by firms listed in the building materials as its shareholders smiled to their various homes with N272.65 billion as dividends. CCNN paid its shareholders N5.26 billion as dividends in 2018.

Shareholders of nine banks reaped N220.53 billion as dividends in 2018, which amounted to 28.2 percent of the dividends paid by NSE listed firms in 2018.  The banks are Zenith Bank, Stanbic IBTC, UBA, GTB, Access Bank, FCMB, Fidelity, FBN Holdings and Wema Bank. Zenith Bank paid N85.5 billion as final dividends just as Stanbic IBTC and UBA paid N15.4 billion and N22.2 billion as dividends respectively.

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GTB rewarded its investors with N72.1 billion as final dividends in 2018.  Others dividend payments are as follows: Access Bank, N8.89 billion; FCMB, N2.77 billion; Fidelity Bank, 3.18 billion; FBN Holdings, N9.33 billion and Wema Bank, N1.16 billion.

Oil and gas stocks, led by Seplat Petroleum Development Company, paid N190.69 billion  as dividends to their shareholders for the 2018 financial year. Seplat declared $0.05 as final dividend. With a naira-dollar exchange rate at N306.4/$, the total dividend paid by the company amounted to N180.30 billion in 2018, representing 95 percent of the oil and gas dividends and 24 percent of the total dividends paid year to date on the Nigerian Stock Exchange.

Other sub sectors are on the fringes. Food and beverages sub sector paid N46.84 billion, to account for 5.98 percent of the total NSE dividends year to date. Nestle and Dangote Sugar are drivers of the sub sectoral rewards for shareholders. Nestle Nigeria paid N30.5 billion while Dangote Sugar paid N13.2 billion as final dividends in 2018.

The breweries sub sector, in particular, Nigerian Breweries, paid N14.63 billion, representing 1.9 percent of the total NSE dividends year to date.

Stocks listed under the conglomerates such as Transcorp, Unilever, UACN, among others cumulatively paid N11.72 billion as dividends translating to 1.50 percent of the total dividends paid year to date.

However, investors seem not to be impressed enough despite the impressive showing by the listed companies particularly in the top three sub sectors. The All Share Index ended the week in the negative territory as it closed at -4.40 year to date. The main board index posted even worse performance as it ended the week at -14.15 percent year to date.

Analysts are unanimous that the equities listed on the Nigerian Stock Exchange hold much promise for investors. This is because most of the listed stocks presently trade at a discount.
“Dividend is a strong driver of investors’ sentiment.  However, a poor dividend payment cannot be attributed as the sole dragger of the market’s performance. It is barely two years after we exited recession and hence we expect to see most companies recapitalising along their growth path. To help such companies, an increase in the flow of credit to the private sector at affordable rates will go a long way.

“These companies will be faced with fewer pressures towards the need to capitalise earnings as they have alternative means of funding and this could in turn provide available cash for dividend payment”, Chinonye Nnewuihe, senior analyst with Meristem Securities, said.
Sectors that accounted for less than one percent of the total dividends in 2018 include agric, aviation, construction, healthcare, ICT, hotels, insurance, manufacturing, mortgage banking, as well as paints and chemicals.