• Friday, March 29, 2024
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Shareholders to get bumper dividend as pioneer tax to boost Dangote Cement profit

Dangote Cement

Shareholders of Dangote Cement Plc could be paid a higher dividend as a pioneer tax extension is expected to boost profit.

The Nigerian Investment Promotion Council (NIPC) in its third quarter (Q3-2019) Pioneer Status Incentive (PSI) Report has approved Dangote Cement’s (Dangcem) application for a two-year PSI extension.

Following the approval, Dangcem will enjoy tax holiday on its N116.09 billion Ibese Lines 3&4 and N69.54bn Obajana Line 4 until February 2020.

A tax credit of N89.03 billion propelled the company’s full year 2018 profit by 91.10 percent profit to N390.332 billion, and the growth momentum is expected to continue in 2019.

Pioneer status is a tax relief given to a company that set up plant in an economically disadvantaged area, but it has a deadline (between 5 and 7), during which it lapse.

The largest producer of the building material paid out N272.60 billion in 2018, which represents a payout of 70.10 percent, and it has a dividend yield of 11.01 percent.

Analysts at Chapel Hill Denham Limited expect a full year (2019) dividend payout of 68.0 percent, translating to Dividend Per Share (DPS) of N9.03 (6.2 percent dividend yield).

The dividend yield is the ratio of a company’s annual dividend compared to its share price.

The largest company by market capitalization said it was looking to expand cement capacity on the continent by 29 percent to 62 million tons, consolidating its share of the Nigerian market. It plans to add six million tons in Nigeria next year, taking volume in Dangote Cement Plc’s home market to 35 million tons.

Cement makers in Africa’s largest economy are poised to take advantage of Federal Government record proposed capital expenditure to spur growth and strengthen profit.

President Muhammadu Buhari had directed the Ministry of Finance, Budget and National Planning to release N600 billion for Capital Expenditure in the next three months.

The President gave the directive in his nationwide broadcast to mark the Nigeria’s 59th Independence Anniversary on Tuesday in Abuja.

The president said Federal Government had so far released N1.74 trillion for execution of various capital projects in the 2018 fiscal year.

Dangote Cement is trading at a price to earnings ratio of 6.24, which means its stocks are attractive. Its share price closed at N145.12 as of 2:00pm, Lagos, valuing it at N2.47 trillion.

 

BALA AUGIE