54 Listed Companies Fail To Pay Dividends In 5 Years

Fifty-four companies listed on the Nigerian Exchange (NGX) Limited have failed to pay dividends to their shareholders for more than five years, LEADERSHIP learnt.

Dividends are the share of a company’s profit distributed to shareholders, paid like a bonus to investors. Dividend payment is one of the very few ways available for investors to earn a constant stream of income.

However, out of the 153 companies on the Exchange, there are 54 companies that have not paid out dividends since 2019.

The affected companies translate to about 34 per cent of listed companies in the country.

Analysts say not paying dividends does not mean that a company is not good enough to invest in, however, it depends on the company’s dividend policies.

Some companies, they said, would rather reinvest their profit in the business to drive expansion and development, while others have made back-to-back losses and, hence, do not have the capacity to pay any returns to shareholders.

A breakdown of the companies, according to data obtained from the NGX, showed that four companies last paid dividends five years ago; three companies paid dividends six years ago; two companies last paid dividends seven years ago, one last paid eight years ago; two companies last paid dividends nine years ago while two companies last paid dividends 11 years ago.

Also, three companies last paid dividends 13 years ago; six last paid 14 years ago; one company paid 15 and 16 years ago; and three companies last paid 21 years ago, among others.

Further analysis showed that under the NGX Alternative Securities Market (ASeM) board, Capital Oil paid its dividend last in 2001, and Rak Unity Petroleum Company in 2019.

Under the agricultural sector of the Main Board, FTN Cocoa Processors (2010). In Conglomerates sub-sector, John Holts (2005) and SCOA Nigeria (2015), while Arbico Plc, a stock under Construction/Real Estate sub-sector, paid dividend last in 1998.

In the Consumer Goods sector, DN Tyre & Rubber (2002), Champion Breweries (1986), Golden Guinea Breweries (1997), Multi-Trex Integrated Foods (2010), Union Dicon Salt (2002), and Nigerian Enamelware (2016).

In Financial Services sector; Unity Bank paid dividend last in 2011 under Banking, while African Alliance Insurance, Goldlink Insurance, Guinea Insurance (2010), Mutual Benefits Assurance (2018), Niger Insurance, Prestige Assurance, Regency Assurance (2019), Sovereign Trust Insurance (2011), Staco Insurance (2008), Standard Alliance Insurance (2009), Universal Insurance, Veritas Kapital Assurance (2017), Coronation Insurance (2016) are all listed under the Insurance Carriers, Brokers and Services sub-sector.

The Micro-Finance Banks sub-sector has Abbey Mortgage Bank (2011), Aso Savings and Loans (2009), Resort Savings & Loans (2010) and Union Homes Savings and Loans (2008), Other Financial Institutions sub-sector has Deap Capital Management & Trust (2009) and Royal Exchange (2015).

The Healthcare sector has Ekocorp (2009), Morison Industries (2009), and Pharma-Deko (2018). Under ICT sector are Omatek Ventures (2009), NCR Nigeria (2012), Chams Holding Company (2019), and e-Tranzact International (2017).

The Industrial Goods sector has Premier Paints (2001) and Austin Laz & Company, while under the Natural Resources sector is Thomas Wyatt Nigeria (2007).

Oil and Gas sector has Japaul Gold & Ventures (2014) and Oando (2014), while Services sector has Afromedia paying dividend last in 2018, Medview Airline (2018), R T Briscoe (2012), Tantalizers, Tourist Company of Nigeria, Daar Communications, Eunisell Interlinked (2002) as well as Secure Electronic Technology.

The group executive chairman of Lancelot Group, Mr. Adebayo Adeleke stated:  “Unfortunately, the law does not specify any punishment for any company that does not pay dividend. The law recognises business as a risk and business owners or shareholders as risk takers.”

From the law perspective, Adeleke said: “It is when a company has done business in the course of a year and is reporting distributable profits, that is the only time when such profits can be declared as dividends to shareholders. That is why shareholders are actually the owners of the business and they are always the last set of stakeholders to be paid.

“The company pays the staff, pays government taxes, pays suppliers, pays everybody, and at the end of the day, whatever is left is given to shareholders. So, if by the end of the year, nothing is left for the shareholders, or what is left is too small to distribute to shareholders, or even if something is left but in the opinion of management, it will be much more prudent not to give out that which is left as dividend for that year, there is hardly anything that the shareholders can do. “The law does not compel any company to pay dividends.”

However, from the angle of the shareholders, he stated that, “there is nobody who plants, who does not expect some level of harvest. And I think most of the time when businesses do not do well, to the point where they do not pay dividends, it is always because something is not right in corporate governance.

“So, shareholders are supposed to pay very close attention to businesses where they have invested their hard-earned money and ensure that those businesses are well run in the way and manner that is to give them dividends at the end of the year. And if they are not well run, they have the right to remove the board. The board has the right to remove the management and down the line like that.”

He added that it is the duty of the shareholders to ensure that their businesses are profitably run, so that at the end of the year they can get some dividends.

On his part, the chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion said, “Companies with a regular or stable dividend policy are regarded as strong partly because dividend is paid from a company’s profit for a particular period or from revenue reserves (also known as retained earnings), with profitability and robust revenue reserves suggesting that a company is on a sound financial footing.”

He stated that before ploughing their money into stocks, investors should consider if such companies have a track record of dividend payment called dividend history, among other factors.”

He noted that a firm may not distribute dividends although it made profits as the choice not to pay dividends does not always imply a lack of buoyancy.

He said,“ Companies in the growth stage, unlike well-established firms, hardly pay dividends but are rather keen about expansion, acquisitions and product development, which often requires huge outlay that may consume cash that otherwise would have gone to paying dividends. This has a way of boosting share price, thereby creating value for investors.