Despite economic challenges, investors’ in the Nigerian capital market has continued to enjoy mouthwatering return on investment as most highly capitalised declares improved dividends.

For instance, Dangote Cement Plc, MTN Nigeria, Zenith Bank Plc, among five other companies listed on the Nigerian Exchange Limited (NGX) have proposed a total dividend of N827.05billion for 2021 financial year.

The proposed dividend is an increase of 29 per cent when compared to N639.25billion paid out by these companies in 2020 financial year.

The other companies are Guaranty Trust Holding Plc (GTCO), United Bank for Africa Plc, Lafarge Africa Plc, Dangote Sugar Plc and United Capital Plc.

THISDAY analysis of results released to the NGX showed that the eight companies reported a total N1.27 trillion profit in 2021 financial year from N1.08 billion reported in 2020.

Leading the pack is Dangote Cement with about N364.44 billion profit in 2021 from N276.07billion in 20202 and proposed a dividend of N340.81billion in 2021 from N272.65billion proposed in 2020.

This represents a dividend of N20 per unit of 50 kobo ordinary share from N16.00 per unit proposed in 2020. Based on its current stock price of N273.5, Dangote Cement’s dividend yield is about 7.3 per cent.

With about N298.65 billion profit in 2021 from N205 billion in 2020, MTN Nigeria for 2021 financial year proposed dividend of N212.7 billion from N133 billion proposed to investors for 2020 financial year.

The telecommunication giant in 2021 proposed N4.55 interim dividend (2020: N3.50 kobo per share) and final dividend of N8.57kobo per 2 kobo ordinary share, bringing the total dividend for 2021 financial year to N13.12 kobo from N9.5kobo total dividend paid to shareholders in 2020.

Of the listed banks, Zenith Bank, the most profitable financial institution proposed N97.32 billion total dividend for the financial year 2021, translating to N3.01 per share, after getting shareholders to agree to a dividend payout of N87.91 billion for the second half of the year, which translates to N2.80 per share.

The bank had earlier paid an interim dividend of N0.30 per share totaling N9.4 billion for the first half of the year. It paid shareholders N3.0 per share, summing up to N94.19 billion in 2020.

Zenith bank reported N244.4 billion profit in 2021, from N230.6 billion reported in 2020 and it becomes the highest profit ever declared by a listed bank in Nigeria.

Last year’s profit growth rate was, however, the slowest since 2016. The bank’s profit grew at a mere 6.5 per cent compared to 10 per cent between 2019 and 2020.

Meanwhile, the management of GTCO recommended a final dividend per share of N2.70 per share, coupled with the earlier paid interim dividend of N0.30 kobo in May 2021, hence bringing the total dividend for the financial year to N3.00kobo, same as what was paid in 2020 but a seven per cent increase from the total dividend paid in 2019.

On their part, the management of UBA proposed a final dividend of N0.80 per share in 2021 financial year from N0.35 proposed in 2020.

The proposed final dividend and the N0.20 per share interim dividend paid in September 2021, brings the lender’s total dividend for the year to N1.00, amounting to a pay-out ratio of 29 per cent from 16 per cent and a yield of 12.4 per cent.

Others with dividend payout to investors are: Lafarge Cement with a proposed N2.00 total dividend in 2021 from N1.00 proposed in 2020, representing N32.22billion dividend in 2021 from N16.11billion in 2020;

United Capital proposed N1.50 kobo ordinary share of 50kobo each in 2021 from N1.00 paid in 2020, translating into N9billion dividend payout to investors in 2021 from N4.2billion in 2020 and Dangote Sugar Refinery proposed a dividend of N12.15billion for 2021 financial year from N18.22billion reported in 2020.

Commenting, shareholders commended impressive earnings by listed companies and dividend payout amid domestic and foreign macro economic challenges.

Speaking on behalf of Nigerian shareholfders, Chairman, Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie questioned Dangote Cement’s N20 per ordinary share dividend to investors, maintaining that the cement manufacturing could have rewarded investors better for 2021 financial year.

He added: “These companies have shown resilient performance despite numerous challenges in the economy. Zenith bank has surpassed analysts’ expectation with profit and dividend payout to investors, the same for GTCO, UBA, among others.”

Market analyst and Managing Director/CEO APT Securities and Funds Limited, Mr. Garba Kurfi commended listed companies for posting impressive result and accounts for 2021, expressing concerns that the declared dividend by these companies did not reflect in the trajectory of the stock market.

According to him: “These companies have declared impressive dividend payout to investors but I do not know why the stock market did not respond to dividend payout by Dangote Cement, Zenith Bank, among others. Although the likes of GTCO and UBA released their audited accounts after the close of trading last week, I am yet to see stock price appreciation.

“Take for instance, Lafarge Africa last year was trading at N31 and declared N1.00 per ordinary but this year, the company declared N2.00 and trading at N24.00 per share. The dividend by these companies has not reflected in our domestic market.”

On his part, analyst and CEO, Wyoming Capital & Partners, Mr. Tajudeen Olayinka urged investors to investigate if these companies were paying from the reserve or current earnings reported on the NGX.

“For those companies that have proposed dividend, we praise their effort. If a company is paying from current earnings, it shows effective management despite the challenges. What some of these companies are paying as dividend is substantial which is good for their stock prices.”

He added that: “It is excessive if a company is paying over 10per cent yield on its dividend to shareholders and it means these companies are operating at a higher cost per capital. When you have a functional market where companies are doing well, I don’t expect a company to pay more than five per cent yield on dividend to shareholders.

“That was the level our domestic market was in 2007 before the global economic meltdown. If a company is able to pay at least five per cent yield, it means they will be able to raise money at a low level per capital.”