Top 10 Dividend Paying Stocks On Nigeria Exchange Ltd (NGX)

dividend paying stocks
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Top dividend paying stocks on NGX. 

First, the NGX (or Nigeria Exchange Ltd) is the new name for Nigeria Stock Exchange.  NSE took the name NGX when it  de-mutualized and became a limited liability company in March 2021.

NGX is one of Africa’s biggest stock exchanges; with a market capitalization of NGN32 billion ($78.408) million and over 200 listed equities as at the time of writing.

Income investors can find some good dividend paying stocks on the NGX. In this post we list just 10 of them.

Importance of Dividend Paying Stocks

Dividend paying stocks is very important to income investors for many reasons.  It should also be of interest to you even if you are not strictly investing for income.  The reason is that dividend payment is plays a role in stock valuation.

Beyond valuation, dividend paying stocks can be a good source of stable income streams.  Many investors will want to invest in companies with a history of growing dividend. 

Watch out for well established companies, that are stable and may no necessarily need to reinvest profits to grow.  Such companies are more likely to pay dividend consistently than growing companies or start ups.

High growth companies are less likely to pay dividend because they will be reinvesting their profits to achieve scale.  Companies in the tech industry are usually in this category.

High Dividend Paying Publicly Quoted Companies In Nigeria

In compiling these list, we look at  historical trend to identify companies that are consistent in dividend payment over a period of 10 years. We also considered the dividend per share and dividend yield for the last period.

Now here’s our list of top 10 dividend paying companies in Nigeria stock market.

S/N

COMPANY

PAYOUT

DIVIDEND/SHARE

DIVIDEND YIELD

 

 

NGN’billion

NGN

%

1

Zenith Bank

87.91

3.00

12.7

2

GTCO

82.41

3.00

11.81

3

Stanbic IBTC Holding

10.55

3.43

10.82

4

Access Bank Plc

23.10

0.80

9.29

5

Dangote Sugar

13.20

1.50

9.2

6

Dangote Cement

272.63

16.00

5.71

7

MTN Nigeria

172.40

9.40

5.50

8

Okomu Oil

1.91

7.00

4.93

9

Nestle Nigeria

54.06

60.50

3.55

10

Nigerian Breweries

15.08

0.94

2.15

Explaining the Terms

Let’s briefly explain the terms: Dividend, Dividend Per Share and Dividend Yield. Why are they important to the investor?

Dividend 

If you are new to stock investing, perhaps dividend is the most common term you hear.  Dividend is a  portion of the  profits that a company pays to its ordinary share holders, usually annually.  Though dividend is the primary reward for investing in a company’s ordinary shares, it is only paid out of profits and when declared by the directors.

What this means is that it may not be compulsory that a company pays dividend to its shareholders in any financial year. Even if the company makes a profit in a financial year, it may decide to reinvest the profits to grow the business.

And in the event that the company goes under, secured creditors and preferred shareholders get first consideration before ordinary shareholders.  This is why ordinary shareholders are said to be the risk bearers.

Dividend payout

This is the total amount of dividend a company pays to its shareholders in a given financial year.  If a company makes a profit of say 1 billion and pays 600 million to shareholders as dividend, the 600 million is the pay out.

Dividend can be paid either in cash or other forms of asset, or by giving an additional shares to individual shareholders.  When additional shares are given to shareholders, it is called a bonus.  Shareholders will usually not pay for bonus shares.

The other way a shareholder benefits from his investment is through capital appreciation.  Capital appreciation comes from increases in the share price of a stock. 

You bought a certain number of Zenith share at the current price of 24.00. In six months time, Zenith is trading at 30,00; you have gained 6.00.  Thus, your investment has recorded a capital appreciation of 25% within that period.

Dividend Per Share

This is the amount of dividend payable for each share a shareholder holds.  It is derived by dividing the total amount of dividend by the total units of shares outstanding.  Usually dividend is paid per share.

Thus, if you own 10,000 units of a company shares, and the company pays 1.00 per share in dividend in a particular financial year, what you get as your dividend is 1 x 10,000, which 10,000.

Dividend Yield

The dividend yield is a financial ratio that estimates the return on stock investing assuming dividend payment is the only form of return a shareholder gets.

You derive it by dividing dividend per share by the stock’s current market price.  It is expressed in percentages and shows how much a company pays out relative to the stock price.

The ratio is important in comparing investment alternatives to know which offers better returns.  For instance, you have the options of investing in a certain company shares or in a bank’s fixed deposit product.

If a bank offers you 10% interest per annum, while the company shares is estimated to offer a dividend yield of 15% in that same financial year.  Then it makes more sense to invest in the company shares, particularly if the returns is above prevailing inflation rate.

The ratio is of significant important to income investors as it helps them to choose from among a basket of dividend paying stocks to invest in.

 

 

info@kobotalk.com | + posts

Kobotalk is a business and investing information website which provides useful guides, analysis, and intelligence to promote entrepreneurship and enhance personal financial freedom of its audience.

Kobotalk

Kobotalk is a business and investing information website which provides useful guides, analysis, and intelligence to promote entrepreneurship and enhance personal financial freedom of its audience.

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