Investors in the Nigerian stock market expect to get in return for investing capital appreciation and dividends. The latter requires a bit more patience and is often at risk of being low yielding and can be eroded by inflation. This article is about how quickly you get paid dividends but not before we explain the concept of dividend yield.
Dividend yield as the name implies is the relationship between the amount of dividends you receive compared to the market value of the shares. So if a stock is currently worth N10 per share and the company declares a dividend per share of N1 then the yield is 10%.
A more appropriate yield for Nairametrics will always be the relationship between the net dividend (after deduction of WHT) you receive and the total cost of acquiring the stock. The higher the yield the more attractive a stock is for long term investors.
Quoted companies in Nigeria typically announce dividends same day or a few days after they release their annual reports. Part of what they announce is the closure date (date at which the register closes), AGM Date (when the shareholders will meet to approve the dividends) and Payment date (when the dividends will actually be paid). What they do not take note of is the day the dividend itself was announced.
Nairametrics began taking stock of dates dividends are announced this year and juxtaposed that to the payment dates of the dividends. We wanted to know how long it took companies to pay dividends after they must have announced it. This is important to us because of the time value of money. Dividend received early enough will always be better than dividends received much later. it is also an indication of how cash rich companies are. Some companies can declare dividends out of strong profits but may not have the cash to pay it.
On the average we realized companies took about 33 days between the day it was announced to when it is eventually paid. Some companies of course took longer.
The chart above shows companies that take about 60 days and above to pay dividends from the date it was declared. At over 60 days these companies hold on to dividends at least 30 days longer than their peers. This of course is an obvious erosion of capital for retail investors who have to wait for another 60 days or more to get their dividends long after it has been announced. An early payment of dividends mean shareholders can reinvest their cash quickly enough and get the full benefit of the yield. A delayed dividend payment is tantamount to an erosion of value. Here is a list of the companies with payment days of above 60.
|Company||No of days|
|Transnationwide Express Ltd||136.00|
|MRS Oil Nigeria Plc||126.00|
|Nign Aviation Handling Co. Plc||118.00|
|Ecobank Transnational Inc.||111.00|
|Nigerian Breweries Plc||94.00|
|International Brew. Plc||93.00|
|NPF Microfinance Bank||93.00|
|Seven Up Bottling Company||91.00|
|AG Leventis Nigeria Plc||88.00|
|Forte Oil Plc||87.00|
|Julius Berger Nigeria Plc||79.00|
|Berger Paints Nigeria Plc||75.00|
|Greif Nigeria Plc||67.00|
|Mobil Oil Nigeria Plc||63.00|