Going by history, market analysts have predicted that about five banks might pay interim cash dividends to shareholders as companies continued to released their half-year corporate results ended June 30, 2018.
The banks include: Zenith Bank, United Bank for Africa (UBA), Guaranty Trust Bank (GTBank), Stanbic IBTC and Access Bank. Zenith Bank, in its regulatory filing had indicated that it had scheduled meetings of their directors during which the six-month financial statements would be approved and the payment of an interim dividend, which is subject to the approval of the Central Bank of Nigeria (CBN).
GTBank, last year paid an interim dividend of 30 kobo per share, Zenith Bank and Access Bank paid 25 kobo half year dividend, UBA last year paid an interim dividend of 20 kobo per share, while Stanbic IBTC Holdings paid 60 kobo as interim dividend.
Analysts noted that the banks have a culture of paying half year dividends and going by the first quarter results, the banks will rewards its shareholders with an interim dividend. This has made investors to begin taking advantage of the low equity prices, particularly of interim dividend paying companies mostly in the banking sector.
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.
Dividend payments allow shareholders to benefit from earnings growth through both interim and final dividends. Interim dividends can follow the same strategy as final dividends, but since interim dividends are paid out before the end of the fiscal year, most financial statements that accompany interim dividends are unaudited.
Post-listing rules at the NSE require quoted companies to submit their audited earnings reports, not later than three months or 90 calendar days after the expiration of the period. For quarterly results, companies are to submit their results not later than one month or 30 days after the expiration of the period. The deadline for submission of half year report for companies with June 30, 2018 was July 31, 2018.
So far the earnings seen in the market had been a mixed performance. They however continue to reflect the impact of national economic slowdown, despite the relatively high price of crude oil, exchange rate stability within and continued decline in the inflation rate for June as revealed by the latest report of the National Bureau of Statistics (NBS).
Activities on the NSE, last week showed that gains resurfaced in the equities market, halting the three-week losing streak, as the All-Share Index (NSE) inched up 0.09 per cent to 36,636.97 points, amidst bargain hunting and investor reactions to corporate releases.
Speaking to LEADERSHIP, managing director of APT Securities and Funds Limited, Mallam Garuba Kurfi said, market sentiment and expected results will determine stock market direction going forward, saying the rally seen in the last trading days of last week showed that traders and investors are taking advantage and positioning ahead in companies with history of half year interim dividend payment, many of which are found in banking sector..
A senior stockbroker with Calyxt Securities Limited, Mr. Tunde Oyediran said the banking stocks have historically been the most liquid stocks in the market.
Chief operating officer of Investdata Limited, Mr. Ambrose Omordion said that financial services and consumer goods stocks have started to experienced transaction, saying that Zenith Bank, UBA, FCMB Groups, Fidelity Bank and Nigerian Breweries witnessed increased trading last week and incidentally, all of the stocks are interim dividend paying, with the exception of Fidelity Bank.
Omordion noted that with more second quarter earnings reports expected in the market this week, it is the state of these numbers that will determine direction as more disappointing reports will drive the market further down or reversal if numbers beat expectation, considering the undervalued nature of equities and the high yields.
He pointed out that investors should review their positions in line with investment goals and act as events unfold in the global and domestic environment. He stated that “however, we would like to reiterate our advice that investors should go for equities with intrinsic value, especially during this season were second quarter interim dividend payment are expected in the market arena very soon.
“We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst improving company, economic and market fundamental.”
Analysts at Cowry Asset Management Limited added that activities on the Nigerian stocks market to sustain the bull-run as investors continue to react positively to the good first half year, 2018 corporates’ results released so far.