Companies Likely To Reduce, Or Not Pay Dividend

For most companies listed on the Nigerian Stock Exchange (NSE), there is no need stating the obvious that the 2016 financial year was a very challenging one, given that the nation’s economy within which they operate was in recession during the period, with the attendant implication for purchasing power of those who consumer their products and services. Those that import raw materials or have things to do with foreign exchange did not fair better, and for the banks, the story of loans gone awry has reflected in the a unsavoury tales of non-performing loans.
According to the Nigeria Deposit Insurance Corporation (NDIC), NPL of banks was as much as N1.8tr, which is 10% of the N18tr total banking industry loan book (double the regulatory threshold of 5%). Inflation continues to make a joke of workers monthly take home, even as fiscal and monetary authorities find ways around the plethora of challenges facing the economy.
All of these challenges have reflected in the results released by companies, many of which may not post profit for the 2016 financial year being released during the current earnings season. As a result, their shareholders would not expect a dividend. Shareholders whose companies are able to even offer a dividend are able to pay only less than they did last year. Many have also had to pay all of the year’s profit, just to assuage the feelings of their shareholders, while many other have had to fall back on their reserve for help at a time like this.
In the table above, AMBROSE OMORDION, Chief Research Officers, Investdata Consulting gives an insight into those companies likely to cut dividend payout or not pay anything.