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 since 2012, rather choosing to retain the earnings in its operations. So also does Studio Press (no dividend since 1995, has been reporting profit since 2016), Union Diagnostic (no dividend for years, has been posting profit since 2014), Afromedia (no dividend since at least 2016, has been recording profit since 2017) and Arbico (no dividend since 1998, has recorded profit five times since 2015).
Beer-maker Champion Breweries last paid a dividend in 1986, Golden Guinea Breweries 1997, Juli Plc 1999, Capital Oil 2001, DN Tyre and Rubber 2002, Premier Paints 2001, Livestock Feeds 2001 and Union Dicon 2001.
While Champion Breweries has posted losses four times since 2013, Livestock Feeds recorded losses twice between 2012 and 2020 and Union Dicon made profits just twice between 2014 and 2020. Premier Paints has been racking up losses since 2015.
Daar Communications has never paid dividends since it listed in 2008 and has been reporting losses since at least 2013.
John Holt last shared dividend in 2005, Royal Exchange Insurance 2006, Staco 2008, Standard Alliance 2009, Morrisons 2009, FTN Cocoa 2010 and Guinea Insurance 2010.
FTN Cocoa has been posting losses since 2011 and Royal Exchange Insurance since 2015.
Abbey Building Society, Ekocorp, International Energy Insurance (IEI) and Omatek have not paid dividends since 2011, and Chellarams, Ellah Lakes, NCR, RT Briscoe, Tantalisers as well as Vanleer (formerly Greif) since 2012.
While Abbey has been posting losses since 2016, Ellah Lakes has been making losses since 2012, Omatek since 2014 and RT Briscoe since 2012. Tantalisers reported loss once in the last four years.
Austin Laz and Deap Capital have not declared dividends since at least 2013 just as African Alliance Insurance, CWG, Union Homes and UPDC have not since 2014.
For years, Austin Laz, IEI, UPDC and African Alliance insurance have been heaping up losses, while Guinea Insurance, between 2011 and now, has been making intermittent losses.
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Since 2015, International Breweries and SCOA have not been distributing dividends. International Breweries has been reporting losses for years while SCOA has only reported profit once since 2015.
Eunisell and Niger Insurance have not declared dividends since 2016, with Niger Insurance reporting profit once since 2017.
Secure Electronics (formerly National Sports Lottery) has never paid dividends since at least 2008, while the likes of Japaul, Universal Insurance, Thomas Wyatt, Sunu Assurances, Resort Savings and Loans and Multiverse have not paid dividends for years.
Much as Tourist Company of Nigeria has been posting profits since 2014, it has not been paying dividends for years.
Unity Bank has been posting profits since 2018 but has not been declaring dividends for years.
Tunde Oyediran, a broker at Calyx Securities Limited, said investors should approach their companies in order to ascertain why they fail to pay dividends.
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