Final dividend payments by Nigerian firms have garnered momentum in a sign of economic recovery as 20 of them have rewarded their shareholders with N412.96 billion in 2017, a 36.50 percent increase from the N303.50 billion paid in 2016.
This is just a tip of the iceberg as more dividend announcement will be made this year as more firms are expected to publish their financial statements on the website of the Nigerian Stock Exchange (NSE).
The firms under our coverage include Oil and gas, Financial Services and consumer goods and industrials goods.
Dangote Cement’s N178.15 billion final dividend payments to shareholders for the year 2017 make up 43.32 percent of the total figure of N412.96 billion, based on BusinessDay calculations.
The largest producer of the building material has increased payment by 23.52 percent as full year net income increased by 31 percent while sales were up 7 percent.
“I think the major thing is that they had stronger earnings last year and they stick to progressive dividend payment which is positive for the stock market,” said Tajudeen Ibrahim, head of research at Chapel Hill Denham Limited.
“It reflects some incentives for potential investors to pick up stocks of some of the companies that have announced robust dividend payment,” said Ibrahim.
Ibrahim said Zenith Bank has made more returns to shareholders than most banks as the lender has the strongest dividend yield (DY).
Zenith Bank, United Bank for Africa (UBA), Access Bank, GTBank and Stabic IBTC have announced a combined final dividend of N186.68 billion, which is 45.31 percent of the total figure of N412.96 billion.
Nestle Nigeria Plc’s increased dividend payment by 175.12 percent to N21.79 billion in the period under review as the consumer goods giant’s full year earnings 2017 surged by 325.53 percent to N33.72 billion.
Analysts are of the view that the increased dividend payment by corporates is a reflection of an improved economy since they operate within the same environment.
“All parameters are indicating an improvement in the economy, that is, Gross Domestic Product (GDP), Purchasing Managers Index (PMI).These parameters are expected to impact positively on the performance of firms,” said Johnson Chukwu, managing director and CEO of Cowry Assets Management Limited.
“As the economy improves further one should expect that it impacts on the fortunes of firms,” said Chukwu.
The gross domestic product of Africa’s largest oil producer expanded for three straight quarters last year after a 1.6 percent contraction in 2016, with year-on-year growth reaching 1.9 percent in the final three months of 2017.
An increase in crude prices and the introduction of a new foreign-exchange system that ended a crippling shortage of dollars helped attract more investment flows into the country, while improving liquidity for the nation’s companies.
GlaxoSmithKline Nigeria Plc has declared a special dividend of N7.10 in addition to a final dividend of N0.40, which sent dividend yields to around 30 percent as investors scramble for the company’s stocks.
The healthcare and consumer goods giant says the special dividend will be paid from retained earnings brought forward as at year ended December 2016, including the profit from sale of drinks business as at December 2016.
“Everybody has been trying to buy the stock since the announcements,” said Ibrahim.
BALA AUGIE
