Corporate Nigeria paid over N958 billion in dividends in 2020 according to data from the annual reports of the companies. This figure topped the N851.9 billion paid in 2019 by the same companies under review.
The data was obtained from financial statements of 34 of some of the most capitalized companies on the Nigerian Stock Exchange who reported dividends paid out of their cash flow statements. The report focused on dividends paid out rather than what was declared by listed companies.
The higher dividends paid during the year represent a 13% increase from the year before suggesting that corporates kept their commitments to return cash to their shareholders despite a precarious year that was marred by the Covid-19 pandemic.
At the height of the pandemic in March 2020, some companies like Julius Berger cut back on dividend payments, instead of pushing for bonus issues in combination with dividends. From our estimates, out of the 166 listed entities, a record 9 declared bonus issues during the year compared to just three in 2019 and 2018. Most of the companies that opted for script issues were insurance firms as they faced a recapitalization mandate by the National Insurance Commission.
Dollar adjusted dividends – Despite the 13% increase in dividend payout year on year, the figure is flat in comparison to 2019 when adjusted for exchange rate devaluation. At an exchange rate of N410/$1, the N958 billion paid adjusts to $2.33 billion while the N852 billion paid in 2019 adjusts to $2.36 billion at an exchange rate of N360/$1.
Top dividend payers – The top ten dividend payers made up over 87% of the dividends paid during the year buttressing the dominance of a few mega-corporations in Nigeria’s business and economic landscape.
- As expected, Dangote Cement topped as the highest paying dividend company in Nigeria returning N272 billion to its shareholders in 2020 seemingly unchanged from 2019. Next in line was MTN with N172 billion paid out in 2020. MTN’s dividend grew by 29.5% year on year.
- Zenith and GTBank were the highest paying banks with each paying N87.9 billion and N83 billion respectively dwarfing the likes of UBA and First Bank who paid N33 billion and N14.2 billion respectively.
Growth in dividends – Cement giant, BUA reported a whopping 1000% in dividends largely due to the consolidation of the group’s cement businesses across the country. BUA Cement paid out N59.2 billion in dividends in the year. Union Bank also recorded over 1,400% increase in dividends paying out over N7 billion in 2020. It skipped dividend payments in 2019 except for minority shareholders.
What to expect in 2021: Nairametrics expects dividend payments in 2021 to top what was paid in 2020 as companies recover from the challenges of Covid-19. Corporate profits were much higher during the year despite pandemic challenges, while the cash reserves of the mega-corporations were hardly impacted.
The latest earnings season buttresses our expectations as we have already seen a significant increase in dividend payout of some of the mega-corporations. The final dividends of most of the companies that have announced dividends topped what was proposed in the same period last year. For example, 2021 (2020) Access 55 kobo (40 kobo), GTB N2.7 (N2.5), BUA N2.07 (N1.75), MTN N5.9 (N4.97), etc.