As the year grinds to an end and as investors begin to ponder what went wrong with the stock market in 2018, it may be time to begin to strategise on what needs to be done in 2019 to improve investment returns. The Nigeria All Share index has lost 7.631 points since the beginning of the year to the end of November, a record 20% loss. The importance of high dividend stocks in a portfolio cannot be more now than ever before with the increased uncertainties in the market. One of the ways to keep your investment growing or at least insulated from the ups and downs of the market, apart from through diversification, is to have stable income producing stocks in such a portfolio. Ensuring that you have some of the high dividend yielding stocks in your portfolio is one of the ways to have such stable income. Sometimes, the best or highest dividend yield stocks may not necessarily come from the blue chips or most actively traded stocks. They may come from thinly traded stocks that no one cares to follow.
Here are two of the high dividend yield stocks that you may wish to have an eye on as we enter into the new year, especially if you are a dividend investor or if you are retired and want to sit down and harvest the dividends as they come.
Smart Products Nigeria Plc
The company, Associated Press Limited was incorporated on 11 January 1966 as a private limited liability company and commenced operation as a legal entity immediately. The name was changed to Smurfit Print Nigeria Limited in 1987 and was subsequently converted to a public limited liability company in 1991 which made it change its name to Smurfit Print Nigeria Plc. The name was changed to Smart Products Nigeria Plc on 25 September 2005. The company currently is involved in the processing of palm kernel oil in Nigeria. Though it is thinly traded in the Nigerian market, it has consistently been paying dividends that usually result in high yields.
In 2015, the company paid a dividend of N0.25 per share resulting in a dividend yield of 23.36%, it repeated that in 2016 with a dividend of N0.26 per share which yielded 24.3%. In 2017 and 2018, Smart Products Nigeria Plc paid dividends of N0.23 and N0.10 respectively, giving dividend yields of 41.67% and 22.73% respectively. Given that the company’s shares have almost consistently traded at N0.50 per share, anyone who bought the share in 2015 would have made N0.84 per share, N0.34 per share more than the N0.50 invested just from dividends alone.
RAK Unity Petroleum Plc
RAK Unity Petroleum was incorporated on 20 December 1982 as a limited liability company. It was listed on the second-tier of the Nigerian Stock Market (ASeM) on 21st March 1989; RAK Unity became the first Nigerian indigenous player to be listed on the stock exchange. The company’s key business is in the sales and distribution of petroleum products. This is another thinly traded stock that blesses those that have the courage to hold on to the shares with mouth watering dividend yield each year. In 2015, the company paid a dividend of N0.30 per share resulting in a dividend yield of 60%, although there was no dividends in 2016. In 2017 and 2018, RAK Unity Petroleum Plc paid dividends of N0.10 each year, giving dividend yields of 20% on each occasion. Like Smart Products Plc, RAK Unity Petroleum Plc’s shares trade at N.50 per share implying that anyone who bought the share in 2015 would have made N0.50 per share from dividends. By so doing, the investors would have recovered all their investments in the company.
Thinly traded stocks tend to go unnoticed by investors because they are not popular and they lack analyst coverage but sometimes, they may hold some of the fortune that people are looking for. The good thing about those two is that it does not take an arm and a leg to purchase, they are selling for N0.50 per share and one can easily load up on them.
Disclaimer: The author does not hold any position in either RAK Unity Petroleum or Smart Products Nigeria Plc.