Dividend Yield of companies listed on the Nigerian Stock Exchange (NSE) has, in recent times, continued to increase due to the persistent free-fall in equity prices owing to a bouquet of factors.
The prolonged market downturn has, however, boosted yield, especially of blue-chip stocks and other dividend-paying equities across the different sectors of the market.
Banking and other financial services stocks are powerhouses of any economy, just as they are intermediaries and agents of development. For investors interested in buying high dividend-paying stocks with yields above the prevailing inflation rate, the table below points where to look for companies that have seen the biggest jumps in yield over the recent weeks.
Dividend investing has become necessary in the post-general election Nigerian stock market that has been characterized by a free-fall in equity prices, which has eroded investors’ capital and confidence in the entire economy due to weak macro-economic indices and a lack of development and growth-stimulating policies from government to offer the much-needed direction.
Dividend Yield at any time measures how much cash flow you as an investor are getting for every Naira invested in a company’s equity. It also tells what percentage of net profit a company pays out in the form of a dividend.
This is one of the main factors you need to consider when investing in dividend-paying stocks, as higher Dividend Yield has been considered desirable among investors today.
Also, know that when the share price of a company is low because of the general downturn in the market it has no effect on its payout, which is different from when weak or poor earnings performance results in some form of correction that manifests in form of the low share price. We must not forget that it is a company’s earnings that determine its dividend payout.
Note that, earnings determine what any company will pay because of ‘no earnings no dividend.’ The Nigerian Stock market’s average Dividend Yield currently stands at 4.8% and that of many stocks are trading well above that benchmark.
That is why you as an investor or trader should allow the current Earnings Per Share and the Dividend Yield percentage guide you as you study the numbers in the table above.
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Ambrose Omordion
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