As equities listed on the Nigerian Stock Exchange (NSE) extended their bearish performance to the second consecutive week in June amidst muted investor appetite for stocks with strong fundamentals, high dividend-yield stocks continued to create good investment options for risk-averse investors.
| HOW NSE 30 COMPANIES RANK BY DIVIDEND YIELD AS AT JUNE 14, 2019 | ||||
| S/N | COMPANY | SHARE PRICE (N) | DIVIDEND YIELD (%) | YTD RETURN (%) |
| 1 | UBA | 6.15 | 13.93 | -20.13 |
| 2 | Zenith Bank | 20.00 | 13.90 | -13.23 |
| 3 | Total Nigeria | 150.00 | 11.33 | -26.11 |
| 4 | Dangote Sugar | 10.60 | 10.38 | -30.49 |
| 5 | GTBank | 31.00 | 8.87 | -10.01 |
| 6 | Dangote Cement | 184.00 | 8.70 | -3.00 |
| 7 | Access Bank | 6.40 | 7.75 | -5.88 |
| 8 | Flour Mills of Nig | 13.90 | 7.22 | -39.83 |
| 9 | NASCON | 14.80 | 6.76 | -17.78 |
| 10 | Fidelity Bank | 1.68 | 6.55 | -17.24 |
| 11 | Mobil | 163.50 | 4.98 | -11.86 |
| 12 | Unilever Nigeria | 31.00 | 4.69 | -16.22 |
| 13 | Okomu Oil | 74.00 | 4.35 | -2.89 |
| 14 | Nigeria Breweries | 58.00 | 4.19 | -32.16 |
| 15 | Nestle Nigeria | 1430.00 | 4.09 | -3.70 |
| 16 | GUINNESS | 47.50 | 3.93 | -34.03 |
| 17 | FBH Holdings | 6.95 | 3.74 | -12.58 |
| 18 | Presco | 55.00 | 3.64 | -14.06 |
| 19 | Seplat | 513.40 | 3.61 | -19.78 |
| 20 | Stanbic IBTC | 42.50 | 3.53 | -11.37 |
| 21 | TRANSCORP | 1.13 | 2.65 | -14.39 |
| 22 | MTN Nigeria | 135.60 | 0.00 | 50.67 |
| 23 | Ecobank | 9.85 | 0.00 | -29.64 |
| 24 | Int’l Breweries | 18.55 | 0.00 | -39.18 |
| 25 | WAPCO | 9.75 | 0.00 | -21.69 |
| 26 | Union Bank of Nig | 7.00 | 0.00 | 25.00 |
| 27 | Oando | 3.90 | 0.00 | -22.00 |
| 28 | Sterling Bank | 2.35 | 0.00 | 23.68 |
| 29 | Dangote Flour | 16.00 | 0.00 | 133.58 |
| 30 | Forte Oil | 29.40 | 0.00 | 2.44 |
| Source: NSE, Bloomberg | ||||
Dividend yield, which is expressed as a percentage, is a financial ratio that measures the annual value of dividend payout to shareholders of a company relative to the market value per share of the company’s investment security. A dividend is a portion of a company’s profit paid to its owners.
BusinessDay reviews dividend yields of NSE 30 companies’ stocks to show the yields investors can expect by buying such stocks at a time when the market has lost as much as 4.40 percent of its value since the start of the year, even as investors continued to wait for a market catalyst.
NSE 30 is the price index that tracks the top 30 companies in terms of market capitalisation and liquidity. But of all the 30 firms, only 21 companies will be reviewed as others have no dividend yields as at the close of business on Friday, June 14 owing to various reasons.
It is noteworthy that the share price of any stock varies as it trades daily at the bourse, it indicates that a company’s dividend yield rises when its share price falls and vice versa.
Furthermore, the dividend yield ratio may not be used independently as a valuation metric, equity investors are therefore advised to consider other valuation checks as well as the dividend-paying track record of the company before they finally make their decisions.
For instance, despite mid-tier lender, Ecobank Transnational Incorporated plc (ETI) recording a 46 percent profit growth to N102.17 billion from N69.99 billion in 2018 with a percentage increase in gross earnings and operating income, the bank said its directors could not recommend dividend payment for the year as it looks to build its liquidity buffer after a 3 percent depletion in its shareholders’ equity.
As a result of the zero dividend payout, the company has no dividend yield and therefore ranks least among the firms considered.
Although high dividend yields may look attractive to investors willing to take positions in the stocks, it could have a high-cost implication on the company’s growth prospect as the money which could have been ploughed back to stimulate growth is used to compensate investors for the higher risk taken.
Data gathered from the NSE after the close of trading on Friday, June 14 show that tier-one bank, United Bank for Africa (UBA), leads the pack with 13.93 percent dividend yield. The lender paid a final dividend of 65 kobo for every unit of shares held by its shareholders, the stock closed unchanged last Friday at N6.15 on the NSE.
Zenith Bank followed closely with a dividend yield of 13.90 percent. The bank paid its owners N2.50 per share, translating to N78.5 billion pay-outs from N193.4 billion it generated as profit-after-tax in the 2018 financial year.
In the same vein, Total Nigeria, a major player in the downstream sector of the Nigerian oil and gas industry, stood at the third position with an annual dividend yield of 11.33 percent. The company declared a final dividend of N14 per share and is expected to pay the amount for every unit of shares held by its owners on June 28.
Also on the ranking are Dangote Sugar, Guaranty Trust Bank, Dangote Cement, Access Bank, Flour Mills of Nigeria, National Salt Company of Nigeria, Fidelity Bank, Mobil, Unilever Nigeria, Okomu Oil and Nigerian Breweries.
Others include Nestle Nigeria, Guinness, First Bank of Nigeria Holdings, Presco, Seplat, Stanbic IBTC, and Transnational Corporation of Nigeria.
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