Stock Picks| It’s still the earnings season and we expect to see more companies release their first-quarter results for 2018. First quarter results, though premature, typically provide investors with an idea of how the economy is faring – if it is moving in the right direction. It is also a great period for stock picking for portfolios as we look forward to more capital appreciation.
While we await the next set of results to decide our next picks, our searchlight is shifting to companies that are likely going to pay dividends this month and will focus on stocks that we could actually “own for life”. After all, one of the rewards of investing is dividend payments.
Nigeria Breweries Plc
Nigeria’s largest brewer by market capitalisation declared dividends of N3.13 per share. It is one of the most reliable dividend stocks out there and has paid dividends almost every year at least in the last decade. At the time it declared dividend, the share price was about N130 per share, representing a dividend yield of 2.4%. Not a lot in a greater scheme of things, especially when you consider that treasury bills can give you 13% per annum in yields.
Stocks like Nigeria Breweries reward their investors mostly via capital appreciation. Between the days of the announcement of its dividends and today, the share price has gone from N127.8 per share to as high as N135 and now trades at N126.9. So, it has been pretty much flat over this period and hasn’t been a great short term buy. But if you are looking for a reliable dividend stock, then Nigeria Breweries is one you want to own.
They pay dividends on the 23rd of April, 2018.
Zenith Bank Plc
Zenith Bank is the largest bank by asset base in Nigeria, and one of the most consistent dividend payers out there. It has consistently delivered profits for over 20 years and continues to remain a reliable financial institution. Its dominance in the industry has not translated to dominance in capital appreciation for investors. That charge is currently led by Guaranty Trust Bank Plc. However, Zenith Bank remains up in there with the others and hasn’t done badly either. It has returned 105% in the last one in terms of capital appreciation. However, in terms of year to date returns, it has returned 3.3% for its shareholders. At its current share price of N26.95, it trades at a price-earnings ratio of 4.76x and compares favourably to the industry average of 5x.
Zenith Bank paid dividends on the 13th of April 2018, its final dividend from its 2017 results. The bank pays dividends twice a year and we expect another interim dividend to be announced sometime in July.
NASCON Allied Industries Plc
A member of the Dangote Group, Nascon is our third dividend stock pick for the week and we absolutely love this stock. It has paid dividends every year since we started tracking it in 2013. This year, it proposed dividends of N1.50 per share up from 70 kobo a year ago.
Nascon has also been one of the best performing stocks this year, returning 18.6% year to date. It has also returned a whopping 178% in the last one year, so not only is it a good dividend stock, it also rewards investors in terms of capital appreciation. 5 years ago, this stock was trading at N9 per share, thus it has also demonstrated a capacity to reward shareholders over a long period of time. I have owned Nascon for years now and wished that I had bought more two years ago when it sold for N6.38.
These stocks are great dividend stocks and if I had my way, I’d own every single one of them in my portfolio. A retail investor should always gun for stocks with the dual capacity to pay dividends and attract capital appreciation.