In spite of the bashing the Nigerian capital market has received, on account of the likely impact of coronavirus on the global economy, as Nigeria is seen to feel the impact of poor growth in China, sixteen listed firms have so far declared N644.28 billion dividends in the on-going dividend season, Dividend Monitor of BusinessDay Research and Intelligence unit (BRIU) has shown.
But for these mouth-watering dividends, the mood in the Nigerian stock market could have become significantly bearish.
The All Share Index of the Nigerian Stock Exchange (NSE) closed last week Friday at 26,279.61 points, signifying that equities listed on the Nigerian bourse have cumulatively declined by 2.10 percent year to date. The bearish sentiment has weighed heavily on stocks listed in the consumer goods sub sector, resulting in the NSE Consumer Goods Index closing at -27.27 percent, the worst performing sub sectoral index in the entire market. This is followed by NSE Meri Growth Index, -16.50 percent; NSE Main Board Index, -11.80 percent and NSE Oil & Gas Index, -10.15 percent.
The firms that have so far declared dividends include Nigerian Breweries, Transcorp, United Capital, Infinity Trust Mortgage Bank, Stanbic IBTC Holdings, GTB, UBA and Access Bank. Others are Custodian Investment, Africa Prudential, Zenith Bank, Transcorp Hotels, Vitafoam, Nestle, Dangote Cement and MTN Nigeria.
Meanwhile, three institutions accounted for over two-thirds of the dividends so far declared by the listed firms. The firms are Dangote Cement, Zenith Bank and GTB. With N272.65 billion as the final dividend, Dangote Cement accounted for 42.3 percent of the dividends so far declared on the NSE this year. Zenith Bank will pay shareholders N78.49 billion, representing N2.50 per share, and this amounted to 12.2 percent of the total dividend declared so far.
GTB will pay shareholders N73.58 billion which implies that 11.4 percent of the dividends declared since the beginning of this year came from Guaranty Trust Bank. When combined the three firms-Dangote Cement, Zenith Bank and GTB accounted for 66 percent of the dividends for shareholders as at March 6, 2020.
On why the dividends so far declared have not lifted up market sentiments, a senior analyst in one of the leading investment firms attributed this development to the expected impact of coronavirus on the global economy.
“We have seen some blue chip companies such as Dangote Cement attempt to maintain a steady pay-out despite weaker performance. The general sentiment in the market in the last few weeks is less about the declaration of dividends and potential pay-out, but driven more by macro indications of softer oil prices and the consequence for the economy. While there will be pockets of gains here and there, the bigger picture will communicate a risk off sentiment from investors driven by expectations of weaker economic performance”, Olumide Ibikunle, senior analyst, Meristem Securities, said.
Nestle Nigeria has declared N35.67 billion as final dividend representing 5.5 percent of the listed firms under coverage. And by recommending N27.4 billion and N14.2 billion, United Bank of Africa and Access Bank accounted for 4.2 percent and 2.2 percent of the total dividend declared year to date.
When BusinessDay Research and Intelligence Unit (BRIU) ranked the sixteen firms by dividend yield, five firms stood out of the pack. A dividend yield gives an investor an idea of which stock can consistently generated income, and it is seen as a measure of the productivity of an investment.
If all the sixteen firms were to represent the Nigerian capital market, the nation’s stock market would have posted 7.5 percent dividend yield, that is the measure of the productivity of market as at Friday, March 6, 2020.
United Capital, one of the leading investment banks in the country, closed last Friday at N3.10 per share, which translates to 16.1 percent dividend yield. Africa Prudential closed last Friday at N4.70 per share, indicating a dividend yield of 14.9 percent. Zenith Bank ended the week at N18.80 per share which translates to 13.3 percent dividend yield.
The United Bank for Africa (UBA) ended at N6.90 per share last Friday which represents 11.6 percent dividend yield, while GTB closed the week at N24.60 per share representing 10.2 percent dividend yield. Vitafoam and Dangote Cement posted 9.3 percent and 9.4 percent as their dividend yields respectively
Other dividend yields are below the market average. Nigerian Breweries recorded 3.7 percent dividend yield; Transcorp, 1.2 percent; Infinity Trust Mortgage Bank, 2.5 percent; Stanbic IBTC Holdings, 5.7 percent; Access Bank, 4.7 percent; Custodian Investment, 6.4 percent and Transcorp Hotels, 1.7 percent. Others are Nestle Nigeria, 4.3 percent and MTN Nigeria, 4.3 percent.
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