Dividend payments for many Nigerian retail investors are the most obvious advantage of owning stocks. Still, many listed companies on the Nigerian Exchange (NGX) have left investors waiting uselessly.
According to a recent study, around 45 of the 146 businesses listed on the NGX have not paid dividends in at least five years; therefore, their investments in terms of monetary rewards are “silent.”
Particularly those who depend on regular dividend payouts as a reliable source of income, The News Chronicle understands that this dividend drought has upset several investors. Dividends are regarded as proof of a company’s financial strength and a clear indication of management’s willingness to reward stockholders, unlike capital gains, which are subject to erratic price swings.
The causes of this protracted silence vary. Some firms are battling ongoing losses, whereas others opt to put profits into activities or growth above shareholder payout. Still, even this approach has not always produced results; many of these businesses are still in cycles of underperformance.
The register of companies without dividends spans several industries. Companies such as Golden Guinea Breweries, Nigerian Enamelware, and International Breweries have held back payments in consumer goods. Royal Exchange, Regency Alliance, and Universal Insurance in the insurance industry have not paid dividends for more than ten years.
Among the laggards are healthcare businesses like Morison Industries and PharmaDeko as well as ICT companies including Omatek Ventures, Chams, and NCR Nigeria. Since their listing, some firms, like Daar Communications and Secure Electronic Technology, have never delivered dividends.
Interestingly, some of these so-called silent stocks have shown significant price increases this year, notwithstanding their poor fundamentals. For instance, Ellah Lakes, FTN Cocoa, SCOA, and International Breweries have provided double or triple-digit year-to-date rallies, therefore provoking doubts about whether such pricing momentum is sustainable without adequate profits and dividends to support it.
Analysts contend that this gap between increasing share values and missing shareholder rewards should encourage investors to be more careful. Even if some of these companies may eventually turn around, dividend droughts sometimes expose more basic issues. Long-term investors learn from this: true value comes from consistent profitability and a management culture that gives shareholder returns highest emphasis, not from speculative rises.
