By Akin Akinremi
Capital market operators have said quoted companies would record mixed dividend payment for the financial year ended 2014, as some of the companies’ corporate earnings might be impaired by many macroeconomic and regulatory issues.
The companies have started announcing their earnings results for the year ended December 31, 2014 with Nigerian Breweries, Forte oil and Nestle opening the floor and investors are expecting others to follow suit.
Nigerian Breweries proposed a final dividend payout of N3.50k, which translates to a dividend yield of 3.68 percent and a payout ratio of 84.52 percent. Also Forte Oil gave a dividend of N2.50k compared to N4.00k it gave in 2013. It also proposed a bonus issue of one for every five shares held. The dividend represents a yield of 1.13 percent on the stock price of N222 as at when the result was released. While Nestle proposed a dividend payout of N27.50k compared to N25.50k paid in the preceding year.
Post-listing rules of the Nigerian Stock Exchange require quoted companies to submit their earnings reports, not later three months after the expiration of the period. Most quoted companies including all banks, major manufacturers, oil and gas companies, breweries and cement companies use the 12-month Gregorian calendar year as their business year. The business year thus terminates on December 31.
NSE’s regulatory filing calendar indicates that the deadline for submission of annual report for companies with Gregorian calendar year will be Tuesday March 31. NSE maintains a strict compliance regime on earnings reports. It tags and applies fines on companies that fail to meet earnings reports’ deadline.
Stock Market Stakeholders…
Stock market stakeholders said their expectations on dividend payouts may not be as high as the previous year but they expect the companies that are declaring profit to pay dividend no matter how small it may be. They noted that while some companies may retain earlier payout rates, others may be forced to reduce their payouts.
The Managing Director of Dependable Securities Limited, Mr. Chinenyem Anyanwu, said that the much-expected end year 2014 results of strong market players were being expected any moment from now and it is generally believed by operators that if they meet up the expectation of investors, this will boost the market performance.
However, he noted that there were no strong prospects for any major increase in dividend payouts in the immediate period given the performance of the companies as shown by interim results released so far. Anyanwu noted that regulatory rules, poor power supply, crude oil price crisis and insecurity had combined to weaken corporate performance.
“Regulatory headwinds in the banking sector would only allow modest growth in earnings if at all for 2014 while disruptions to energy source would affect performance of companies involved in industrial goods. Oil companies face the problems with oil price decline despite growing expenses.” he said.
He, however, noted that consumer goods companies are expected to outperform other sectors in terms of dividend payouts.
According to the Managing Director of Highcap Securities Limited, Mr. David Adonri, the current lending rates and devaluation of the national currency would undermine returns to investors. He said dividends and returns to investors, especially real returns, may be poor given the economic situation under which companies are operating.
However, he pointed out that judging from some companies third quarter results, 2014 results, the performance may surpass 2013, saying that some banks, construction, food and beverage and petroleum companies are expected to do well.
Managing Director, Finawell Capital Limited, Mr. Tunde Oyekunle, noted that the current bearish trend in the market may result in high dividend yield for investors, although corporate performance may be low.
According to him, expectation on corporate earnings should be a little above average in respect of dividend yield since most stocks are currently trading above their intrinsic value. However, while dividend yield may be, total earnings may be equivalent to or drop slightly below the performance in 2013.
Speaking on behalf of the retail shareholders, the Chairman of Progressives Shareholders Association of Nigeria, Boniface Okezie, said the three companies, Nigerian Breweries, Forte Oil and Nestle, that had released their results so far were relatively fair in performance and rewarding the shareholders, urging the other companies to emulate them.
He pointed out that any company that is declaring profit should pay dividend despite the harsh economic climate at which they operate.