On the backdrop of severe macro economic challenges, Dangote Cement Plc, MTN Nigeria Communication Plc and nine other companies listed on the Nigerian Stock Exchange (NGX) have declared N899.2 billion dividend pay-out to shareholders for the financial year ended December 31, 2022.
This represents an increase of nearly 12 per cent from N803.99billion proposed by these companies in 2021 financial year.
The 11 companies are: Dangote Cement, MTN Nigeria Communication, Geregu Power Plc, Nigerian Breweries Plc United Capital Plc, Lafarge Africa Plc, BUA Cement plc, Nestle Nigeria Plc, Dangote Sugar Refinery Plc, Transcorp Hotel Plc and Nascon Allied Industries Plc.
Dividend remains one of the key factors that traditionally drive stock market activities and aid investment decisions towards stocks across the globe, and the Nigerian bourse is not an exception.
A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits. When a corporation earns a profit or surplus, the corporation is able to re-invest the profit in the business called retained earnings and pay a proportion of the profit as a dividend to shareholders.
Companies operating in Nigeria and other African countries were faced with double-digit inflation instigated by the Russia-Ukraine war.
With inflation steadily increasing to 21.34 per cent in December 2022, the Central Bank of Nigeria (CBN) had increased its monetary rates that also contributed to severe operating environment for companies in the country.
THISDAY analysis of the 11 companies showed that they generated N1.04 trillion profit after tax in 2022, representing an increase of 13.7 per cent from N914.83 billion reported in 2021 financial year.
Geregu Power and United Capital were the only two companies that reported decline in profit after tax in the period under review.
As Dangote Cement remained the leading company on the Exchange with the highest dividend payout to shareholders, Geregu Power in its three months after listing on the Exchange declared a dividend to shareholders.
With about 4.9 per cent increase in profit to N382.31 billion in 20222 from N364.44 billion in 2021, Dangote Cement declared N20.00 per 50 kobo ordinary share for the second consecutive years, translating into N340.81 billion total dividend payout in 2022 financial year.
According to THISDAY investigation, Dangote Cement between 2020 and 2022 has paid shareholders a total dividend of about N954.3 billion.
On its part, MTN Nigeria declared a sum of N317.53billion dividend in 2022, representing 18.90 per cent increase from N267.05billion in 2021.
On 29 July 2022, the Board of Directors of MTN Nigeria Communication approved interim dividends of N113.99 billion for the year ended 31 December 2022 (Interim 2021: N92.61 billion).
The interim dividend represents N5.60 kobo per ordinary share on the issued share capital of 20.3 billion ordinary shares of 2 kobo each for the period ended 30 June 2022.
The Board of Directors recommend the payment of a final dividend of N10.00 per ordinary share of 2 kobo each subject to shareholders’ approval at the forthcoming Annual General Meeting (AGM). If the proposed final dividend is approved, the total dividend for the financial year ended 31 December 2022 will be N15.60 per share of 2 kobo each.
Other listed firms that rewarded their shareholders in 2022 are BUA Cement, which paid N94.82 billion ; Nestle Nigeria, N48.75billion; Lafarge Africa, N32.22billion; Geregu Power, N20billion; Dangote Sugar, N18.22billion, Nigerian Breweries, N13.87billion; United Capital, N9billion; Transcorp Hotels, N 1.33billion and Nascon Allied Industries, N2.65billion.
THISDAY analysis of the performance of stocks listed on NGX in the last four years showed that the first four months of a new year always turn out to be the best time for a rally in stock prices.
The last week of 2022 and early 2023 signalled that investors have started positioning themselves to tap the opportunity the New Year rally will offer.
Experts lauded 2022 corporate earnings and dividend payout of Dangote Cement, others, stating that firms in Nigeria are resilient to overcoming challenges and declared dividend from their earnings.
Speaking with THISDAY, the Managing Director, ARM Securities Ltd, Mr. Rotimi Olubi said Dangote cement has consistently been paying dividend for over the years.
“I believe this is their usual routine to send a message that they are committed to keeping their legacy and ensure investors that they are financial buoyant,” he added.
Chief Research Officer, InvestData Consulting Limited, Mr. Omordion Ambrose said the 2022 performance of these companies are impressive and their dividend returns more attractive when compared to yields on money market instruments.
“From the results we have seen so far, MTN Nigeria proposed N10.00 final dividend and Geregu Power declared N8.00 in its first dividend payout on the NGX. Some companies’ dividend payout were flat to show how the operating environment was challenging in 2022. Some of these companies over the years have been consistent in dividend payout to shareholders.”
Speaking from a shareholders’ perspective, Chairman Progressive Shareholders Association (PSAN), Boniface Okezie stated that despite economic hardship, Dangote Cement, among others have reported impressive performance.
According to him, “As we have seen from their performance, there is resilience in the corporate world which means there is hope for our domestic economy. Those in the private world have put more handwork, diligence in growing profit and declared dividend in their move to give back to shareholders. These firms pay heavily for security, source for energy and infrastructure which is not their duty.”
Furthermore, market analysts noted dividend-paying stocks is very important to income investors for many reasons, saying that the reason is that dividend payment 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,” they said.
Market analyst and Managing Director/CEO APT Securities and Funds Limited, Mr. Garba Kurfi commended listed companies for posting impressive result and accounts for 2022, expressing concerns that the declared dividend by these companies did not reflect in the trajectory of the stock market.
