By Nse Anthony-Uko
ABUJA (Sundiata Post) – Despite the severe macroeconomic challenges within the country shareholders are still smiling to the bank.
Data from the Nigerian Stock Exchange (NSE) indicate that eight quoted companies will pay a total sum of N31.67 billion as interim dividend to shareholders for the half year ended June 30, 2016.
Given the challenging operating environment and stiff regulatory framework, analysts have expressed fear that investors in the equity market might not earn much on their investment for 2016 financial year.
Fundamental approach in business reveals that investors value dividends paid from companies. They view this as income from stocks they invested in, considering the fact that investing in stocks is riskier than saving money in the bank. The nature of the risk involved has made investors to anticipate a higher average return on stocks to compensate for the greater uncertainty and chance of loss.
Analysts said, “This has made dividend to remain one of the key factors that traditionally drive market activities and aids investment decisions towards stocks across the globe, and Nigerian bourse is not an exception.”
On the stock market some companies have decided to reward their investors twice in the year, interim and final dividend, while others pay the whole dividend at the end of the year, depending on the companies’ dividend strategy.
When compared to 2015, 18 companies paid a total interim dividend of N177.8 billion while we have so far as at August 26, 2016, only eight companies have proposed to pay an interim dividend.
Of the 15 listed banks on the Exchange, only four banks, Zenith Bank Plc, Guaranty Trust Bank, UBA, and Access Bank have declared interim dividend for the period under review.
For the half year reports, Guaranty Trust Bank, Zenith Bank and Access Bank proposed 25 kobo dividend respectively while UBA shareholders to benefit 20 kobo per share interim dividend.
Others are Pharmadeko, Custodian and Allied Insurance, Total and UnityKapital to pay 15 kobo, 0.07 kobo, N3 and 0.015 kobo per share respectively.
Further analysis showed that Zenith Bank is expected to pay N7.85 billion total interim dividend while Guaranty Trust Bank to pay N7.4 billion.
UBA is giving out N7.3 billion and shareholders of Access Bank Plc are to receive a total dividend of N7.2 billion.
Pharmadeko, Custodian and Allied Insurance, Total and UnityKapital will pay N32.52 million, 412 million, N1.02 billion and N208 million total interim dividend, in that order.
Managing director of InvestData Limited, Mr Ambrose Omordion, said despite the harsh operating business environment, companies still continue to consistently reward investors with dividend payment as this is considered as a reward to shareholders.
“As corporate managers strive to increase the shareholders’ value by making the right investment and financing decisions which will minimise the overall cost and in return increase the firms’ profit, it is of good decision for investors to invest in companies that consistently pay dividends as it will guarantee a return at the end of each calendar year.”
Speaking, president, Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie, said “The interim dividend shows effectiveness management of these companies’. Despite the macro economy challenges, their performance is still resilient and shareholders should be expecting higher dividend by 2016 financial year.”
