Nigeria: 51 Nigeria-Listed Companies Fail to Pay Dividends in At Least Five Years

Nigeria: 51 Nigeria-Listed Companies Fail to Pay Dividends in At Least Five Years

Beer-maker Champion Breweries last paid a dividend in 1986, Golden Guinea Breweries 1997, Livestock Feeds 2001 and Union Dicon 2001.

Fifty one out of the 156 firms quoted on the Nigerian Exchange Limited have not paid dividends in at least five years, with some reaching as far back as 26 years ago. That means roughly one in every three companies on the Nigerian bourse has not paid dividend to shareholders in at least half a decade, a PREMIUM TIMES review has shown.

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.

Before ploughing in their money into stocks, investors consider if such companies have a track record of dividend payment called dividend history, among other factors.

Yet, it is probable that a firm will not distribute dividends although it makes profits as the choice not to pay dividends does not always imply a lack of buoyancy.

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.

A raft of world-famous big companies from Mark Zuckerberg’s Meta Platforms (formerly Facebook), Sergey Brin’s and Larry Page’s Alphabet (the parent company of Google ) and Elon Musk’s Tesla to Jeff Bezos’s Amazon and Warren Buffet’s Berkshire Hathaway do not pay dividends, all preferring to invest earnings in long-term growth.

Interestingly, just five of the 51 non dividend-paying Nigerian quoted companies have been posting profits since at least 2016, meaning a vast majority of organisations in this category have been shelving dividend payment plans on the ground of loss-making.

"No one will be happy to have an investment that does not yield dividends, so the companies that do not pay dividends are not encouraging the shareholders," said Boniface Okezie, chairman, Progressive Shareholders Association of Nigeria.

Ecobank Transnational Incorporated has refrained from distributing dividends since 2015 even though it has consistently been reporting profits on account of the credit pact the lender signed with European Investment Bank.Underwriter Sovereign Trust Insurance has not declared dividends since 2011 but has been making profits […]

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