T en directors of big stocks in Africa’s most populous nation received a combined N4.02 billion as dividends from distributable profit in 2015 as a drop in oil price, a weak currency and severe dollar shortage may undermine future payouts. Jim Ovia, the Chairman and of Zenith Bank Plc, got dividend of N1.47 billion in 2015, which is 23.38 percent lower than the N1.97 billion pocketed last year. He is followed by Tony Elumelu, Chairman United Bank for Africa (UBA), who got N1.15 billion in 2015, a 33.57 per cent higher than the N831.60 million received as dividend in the previous period.
Africa’s richest man Aliko Dangote received total dividend of N587.87 million from his sugar company, and also got N195.12 million from the cement business. Raghavan Karthikeyan, a non executive director in Sterling Bank pocketed N237.61 million while another director, Olufunmilola Osunsade got N151.01 million in dividend payment. The payouts are based on the directors’ interest in the issued share capital of the companies as recorded in the register of members and do not include shares they own thorough other firms.
The cumulative average dividend yield of 8 firms gathered by BMI stood at 10 percent, meaning they paid shareholders 10k for every N1.00 they invested in the businesses. Experts are of the view that because Nigeria’s economy is in its worst recession 25 years, companies may cut back on dividend payments as cash flow shrink. A lot of investors look forward to economic prosperity. If you have a robust cash flow, you will pay a large dividend,” said Kunle Ezun currency analyst with Eco Bank. “Because of limited business opportunities, some firms may defer dividend payment.
If a company has plans for future expansion, it will plunge back most of profit and cut payout,” summed Ezun It is widely argued finance theory that stock stock-market investors should be indifferent as to whether they receive their returns as cash dividends or capital gains, in what is called the dividend irrelevance theory.
This is because, as the proponents have argued, investors should be able to create the level of dividends they want by selling their shares if their view is that the dividend they have received is too small. Conversely, the shareholders should be able to purchase more of the stocks if in they consider the dividend they have received to be in excess of what they need. On the other hand, investors and shareholders perceive a dividend paying company as having strong stream of earnings.
A steady payout could discipline managers who may be tempted to use excess cash flow on frivolous acquisitions.
