May 3, 2018/Quantitative Financial Analytics Ltd
Fixed income investors must be feeling unease as yields continue to plunge and may be thinking of where else to run to for improved investment income. One area to look at is the Equities market and one variable that could help in that search is dividend yield.
However, in looking for good investment outlets in the equity market, investors often times look not only at dividend yield but also payout ratio as well as dividend growth. Of the three variables (dividend yield, payout ratio and dividend growth), the most important is dividend growth. Dividend growth does not only tell an investor about the consistency of dividends but also if the dividends being paid year after year are the same rate or in incremental rates.
Dividend growth is usually a sign that management of a company has confidence in the company’s continued earnings power. It is important to point out here that the fact that a company has a strong dividend growth rate doesn’t imply or guarantee a profitable investment, but it gives the investor a feeling of the company’s track record in terms of dividend payment. In most cases though, the higher the dividend growth rate the better especially where the dividend rate exceeds inflation rate.
So which companies grew their dividend in 2017 in Nigeria?
Okomu Oil Palm
Okomu Oil Palm Plc paid a dividend of N1.50 in 2017 as against its 2016 dividend of N0.1 resulting in a 1400% dividend growth. This growth rate is exceptional and it does look like investors should expect such growth to continue in 2018 as the company has already declared a N3 dividend for 2018.
AXAMansard Insurance Plc
AXAMansard Insurance Plc grew its dividend by 150% having paid N0.05 dividend in 2017 against the N0.02 per share dividend paid the previous year. The company which has been relatively consistent with its dividend history has already declared a dividend of N.06 in 2018.
Beta Glass Company (Nig) Plc
Beta Glass Company Nigeria Plc recorded a dividend growth rate of 145% in 2017 after paying a dividend of N0.98 per share compared with the N0.4 dividend paid in 2016. The growth in dividend continues for this company into 2018 with a dividend of N1.07 payable in June 2018.
Dangote Sugar Refinery Plc
Dangote Sugar Refinery plc achieved a dividend growth of 120% in 2017 by paying a dividend per share of N1.1 in 2017 against the N0.5 paid in 2016. 2018 has also seen an increase in dividend growth with the payment of N1.25 in April 2018, representing a dividend growth of 13.6%.
In all, about 26 companies in Nigeria recorded positive dividend growth in 2017 and may be worth looking at by dividend investors in 2018.