Investors sent the bears after Computer Warehouse Group (CWG) yesterday as the information and communication technology (ICT) company announced a dividend recommendation of 8.0 kobo.
CWG’s share price dropped by 4.96 per cent at the Nigerian Stock Exchange (NSE) as the news on the dividend recommendation filtered to the investing public. CWG lost 29 kobo to close at N5.56 per share. The overall market position had indicated a bullish market situation with average return of 0.35 per cent.
Market analysts said the negative response to CWG’s dividend recommendation was due to the low return on investment, considering the listing and current market value of the stock. At today’s opening price of N5.56 per share, the dividend recommendation of 8.0 kobo represents a dividend yield of 1.43 per cent, a yield that is significantly lower than returns by other stocks with similar price range. Skye Bank and Sterling Bank, which trade at lower prices, carry dividend yields of between seven and nine per cent.
An analyst noted that even if CWG had distributed its entire earnings per share of 24 kobo, it would still not compare favourably to other active stocks within the price range. At current market price, CWG’s earnings per share indicates earnings yield of 4.3 per cent.
Meanwhile, audited report and accounts of CWG for the year ended December 31, 2013 showed that turnover rose from N18.76 billion in 2012 to N20.67 billion in 2013. Gross profit increased from N3.75 billion to N3.91 billion. Profit before tax rose to N618.46 million as against N339.23 million while profit after tax increased from N339.23 million to N612.85 million.
CWG had late last year listed its entire share capital of 2.5 billion ordinary shares on the NSE. CWG was incorporated in February 2005 as a holding company for CWL Systems Limited, DCC Networks Limited and ExpertEdge Software Limited.
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