Right Time To Invest In Dividend-paying Stocks

When it comes to investing, a key consideration for most investors is the return on investment. In the Equities market, one of the several ways for investors to earn returns on their stock position is by earning dividend payments on their holdings.

Dividends are a percentage of a company’s earnings that is paid to its shareholders as their share of the profits. Dividends are generally paid annually, with some companies paying quarterly and semi-annually.

Speaking, the chief operating officer of InvestData Consult Limited, Mr. Ambrose Omordion said “there are several reasons why a company pays dividends, part of which is that it indicates that a company is doing well and has generated good profits.

“This in turn reflects positively on a company and help maintain investors’ trust. Dividends can account for a significant portion of investors’ total return over time and the steady income from dividends can help smooth out a stock’s total return over the period.”

On dividend-investing strategies to consider when seeking to invest in dividend stocks, Omordion said, “investors should look out for the company’s dividend per share, which shows the number of dividends distributed by the company for each share of stock during a certain time period and which allows an investor to see which companies are able to grow their dividends over time; and the dividend yield, which is a measure of the company’s annual dividend divided by the stock price on a certain date.”

Meanwhile, companies listed on the Nigerian Exchange (NGX) Limited has started to release their 2024 financial results and this is the right time for investors who want to partake from the corporate declaration (dividends) to invest in the market.

Notably, about 58 companies listed on the NGX distributed over N1.5 trillion in dividends for the financial year (FY) ended 2023. Dangote Cement Plc led the list with a total dividend distribution of about N511 billion, and Airtel Africa followed closely with N276 billion.

Stocks With High Dividends

Smart Products is a construction and real estate company. While it is the smallest stock on the NGX, it had the highest dividend yield of 40 per cent for 2023. This company distributed a dividend of 8.00 kobo per share, with its share price at 20 kobo as of the ex-dividend date in June 2024.

Zenith Bank: It’s one of the leading commercial banks in Nigeria, offering a wide range of financial services. The bank had the best dividend yield among banking stocks for the financial year of 2023. It distributed a total dividend of N3 per share, with an interim dividend of 5 kobo and a final dividend of N3.5.

United Bank for Africa (UBA): Another commercial bank, distributed a total dividend of N2.8 per share, with an interim dividend of five kobo and a final dividend of N2.3.

Presco; an oil palm company that specializes in the cultivation and processing of oil palms for finished products. The company distributed a total dividend of N26.3 per share, covering an interim dividend of N2 and a final dividend of N24.3.

Guaranty Trust Holding Company (GTCO); the parent company of Guaranty Trust Bank. The company distributed N3.2 per share as total dividends for the financial year 2023, featuring an interim dividend of 5 kobo and a final dividend of N2.7.

UPDC Real Estate Investment Trust (REIT); a real estate investment trust that invests in Nigeria’s property market. The company distributed 41 kobo per share in total dividends for 2023, with 19 kobo as an interim dividend and 22 kobo as a final dividend.

Access Holdings; the parent group of Access Bank and other subsidiaries. The company distributed a total dividend of N2.1 per share, with a 30 kobo interim dividend and an N1.80 final dividend.

Fidelity Bank;  a Nigerian commercial bank that distributed a total dividend of 85 kobo per share, featuring a 25 kobo interim dividend and 60 kobo final dividend for the financial year of 2023.

Custodian Investment; distributed a total dividend of N8 per share for 2023, with a 15 kobo interim dividend and 65 kobo final dividend.

Clearly, investing in stocks with dividends is beneficial to shareholders. Companies with a record of making regular dividend payments, year after year, tend to be managed more efficiently, as the company is aware that they need to provide their investors with cash yearly.