Entry Opportunities Widen for Stock Market Investors

By Goddy Egene

Opportunities for investors to buy stocks at relatively cheap price and enjoy regular dividends have widened following the continuing bearish trading in the market.

Uncertain polity and exit of foreign investors who are reducing their holdings in emerging and frontier markets have led to consistent bear run in the market.

The market slide has made the Nigerian Stock Exchange (NSE) All-Share Index (ASI) to record a year-to-date decline of 9.3 per cent as at Monday.

Some other sectoral   indicators have also declined. However, market analysts said the negative trend in the market was an opportunity for bargain-hunting in stocks known for regular dividend payment.

According to them, since capital appreciation appeared to have been subdued due to the bearish run, discerning investors should settle for dividend-paying stocks, taking advantage of their current low prices.

Analysts at Afrinvest had said  although the downbeat nature of the market had left many domestic investors to be sceptical and confused over the potential near term upsides, they said   investors should rather take advantage of  the   current cheaper valuation.

THISDAY checks revealed that some of the stocks which regularly reward investors with dividends are trading at prices below what they opened the year with.

For instance, the Nigerian Breweries Plc, which pays almost 100 per cent of its profit every year as dividend, is trading 23.6 per cent lower than the year’s opening value.

Zenith Bank Plc, which recently declared an interim dividend is 10.4 per cent lower, while Union Bank of Nigeria Plc and United Bank for Africa Plc  are 26.9 per cent and 18.9 per cent respectively lower than their year’s opening prices. Dangote Sugar Refinery Plc, which raised dividend paid last year, is 24.1 per cent. Similarly, Dangote Flour Mills of Nigeria Plc  is 37.4 per cent cheaper.

Others are:  Fidelity Bank Plc (34.5 per cent); PZ Cussons Nigeria Plc(31.8 per cent); Flour Mills of Nigeria Plc (24.1 per cent); Honeywell Flour Mills Plc (25.2 per cent); Berger  Paints Nigeria Plc (22.8 per cent); Total Nigeria Plc (20.4 per cent);United Capital Plc (14 per cent); CAP Plc (16.6 per cent); and Conoil Plc(13.2 per cent).

The petroleum products marketing firm is a regular dividend payer. It paid a dividend of 200 kobo for 2017. And given the performance of the company for the half year ended June 30, 2018, shareholders would equally enjoy higher dividend.

Conoil Plc grew its turnover by 21.3 per cent, from N44.93 billion in 2017, to N54.48 billion in 2018. Gross profit rose from N5.99 billion to N6.39 billion, while profit before tax increased to N809.78 million as against N627.91 million.

Profit after tax rose from N427.29 million in 2017 to N550.65 million in  2018, translating to 29 per cent appreciation.