PROFILE OF 25 DIVIDEND STOCKS FOR 2015 PART 2
The prolonged bearish trend in the market has caused
85 percent of listed companies’ share prices to move with the market direction
and this has pushed the yield of many dividend stocks on the exchange. It is also reducing the waiting period of
investors in some stocks as the price to earnings ratio has dramatically
dropped as price continues to break the support levels for lower lows. When a
stock continues to suffer low prices to make the yield hit those kinds of levels
as we are seeing, it’s just a matter of time before the company is forced to
cut its payouts. But we’re not exactly there yet. Believe it or not, the top
paying dividend stocks on the Nigeria Stock Exchange are now having yields
above 10 percent. With the dividend
yield of the companies and the earnings movement so far in the year, and which
financials are expected in this first quarter, the possibility of dividend
payment is high. Companies with history of dividend payout are more reliable
for income investors because of the clarity and simplicity of their businesses which
are more focused on credible performances that drive earnings for regular
payment.
Consumer
Goods
NATIONAL
SALT
This company is into salt production,
marketing and distribution, alongside other food ingredients that support
cooking. The entrance of the Dangote group into the company has revitalized and
repackaged the company for sustainable profit and this has supported its
increasing dividend payout in recent years. The nature of its products has also
impacted its bottom line. The company’s earnings performance for 2014 was just
above average and below the 2013 numbers. On the strength of its 59 kobo third
quarter EPS and expected full year forecast of 85 kobo, the company is likely
to pay dividend in the range of 60-70 kobo. The company has raised distributions for three years in a
row. The stock trades at 6.10 times earnings and a yield of 14.47 per cent as
at end of trading in 2014. The shares drop by 58.58 percent in a year.
NESTLE
This is a consumer goods manufacturing company with
multiple product lines that service all strata of life, including the young,
old and children. It has continually invested and expanded its capacity to meet
demands for many years and this has continually impacted on the company’s
bottom line on quarterly and yearly bases. The nature and quality of the
company’s products have made marketing easy for it. The strong earnings’ power
of the company has supported its increasing dividend payout for many years.
Also, its relative small share issue and holding structure have supported its
share price, for dividend income and capital protection. Investors should look
the way of this company. The company has remained the highest-priced stock on
the exchange for years. Its stock
currently trades at 46.91 times earnings with a yield of 12.37percent,
including an interim dividend of N10 which was recently paid. The stock will becomes
more attractive if the price drops lower. In terms of profit, this company ranks
first in its sector. A final dividend possibility in the range of N16 to 18 is
high.
AG
LEVENTIS
This company is into sales and servicing of passenger cars,
commercial vehicles, motor-cycles, agricultural and construction equipment as
well as industrial machinery. Yes, it has not been consistent
in paying dividends as the payout has been up and down to reflect the earnings
position at any given time. Due to the nature of its service and those of its
subsidiaries, its future dividend payout cannot be predicted. The
re engineering of its businesses has started impacting on its bottom line. The
stock trades at 9.36 times earnings and a dividend yield of 12.21 per
cent. On the strength of these, its
third quarter EPS may hit 19 kobo with expected full year earnings per share of
21 kobo all things being equal. Dividend in the range of 10 to 15 is possible.
FLOUR MILL
This company is into manufacturing and distribution of
consumer
staple products. Yes, it has been consistent in paying dividends but the payout
has been up and down to reflect the earnings position of the company at a given
time. Due to the nature of its products and those of its subsidiaries, it is
expected that its future dividend payout might increase as it has divested from
cement business to focus on its core business and the re-engineering of other
businesses in the company’s portfolio to impact its bottom line. The stock
trades at 23.33 times earnings and a dividend yield of 5.36 per cent. It currently trades at a reasonable valuation.
One expects its profit margin to improve as the sale of the cement business
reflects in the expected financials in the third quarter and full year.
DANGOTE SUGAR
This is the only sugar
refinery company listed on the exchange that is into refinery of raw sugar into
edible sugar and sale of refined sugar with
strong prospects of growth as it continues to invest in capacity expansion to
meet domestic consumption and export with the aim of boosting profitability.
The backward integration of the company with the setting up of sugar cane farms
in more than five states, is geared towards making raw materials available for
production at low cost. The presidency has also given full support to this move
which is expected to boost activities in the sector. The company has distributed
dividends to its shareholders since it got listed on the floor of the stock
exchange. The company’s stock currently trades at 8.36 times earnings with a
dividend yield of 9.45 per cent. On the
strength of its 76 kobo EPS for the third quarter and the projected full year
EPS of N1.00, the possibility of dividend in the range of 50 to 60 kobo is
high. The stock has an upside potential of more than 20 per cent from the current
price as the market expect a reversal after the election with the earnings
season in view.
VITA FOAM
This is a
household durable company that is into manufacturing
and distribution of flexible and rigid foam, technical foam products and fibre
products
with two product segments - personal and home care. Its sales outlet has gone
beyond the shore of this nation. The company has demonstrated its commitment in
creating value for its customers and stakeholders as it has continued to reward
shareholders with dividend even though its payout has remained at 30 kobo in
the last four years with growing earnings. The company has paid dividend for
five years in a row. The stock trades at 7.20 times earnings and a yield of 7.44per
cent. Its share price in 2014 was relatively stable, losing 17 percent as at the
last trading day of 2014. The company’s earnings performance for the year which
its audited financial is expected in the market any moment and it is strong as the
third quarter EPS of 56 kobo is higher than the full year earnings per share of
52 kobo in 2013. On this note, expect dividend in the range of 30 to 35
kobo.
Industrial
Goods
LAFARGE AFRICA
This is the second largest cement
producing company, which is into building material manufacturing, marketing and
distribution. The company’s determination to expand its capacity to boost its
metric ton output and sustainable development know-how in the sector have
started impacting its performance since 2013 and is likely to continue as
Nigeria bridges its infrastructural gap. The company continues to demonstrate its efficiency
in the management of controllable cost lines by maintaining fantastic margins in
spite of its huge financial obligations. We think the
company’s huge investment in capacity building will yield outstanding returns
for the medium and long term investor. The recent consolidation of Lafarge
Wapco Nigeria and Lafarge South Africa will boost price performance of the
stock in the two exchanged as production capacity has doubled to further
improve profitability. On the strength of its third quarter EPS of N6.80 and
the projected full year EPS of N8.85, the possibility of dividend in the range
of N2.50 to N3.00 is high,The stock trades at 15.54 times of earnings with a
dividend yield of 4.10 per cent as at the last trading day of 2014. The company
is trading at a reasonable valuation with improving profit margin.
BERGER PAINTS
This paint company is into manufacture of decorative, industrial, automotive and marine paints,
putty and allied products. It has been
consistent in paying dividends but the earnings figures of 2014, especially as at
the third quarter was not impressive which is likely to affect dividend payout
for 2015 as the market expects its full year earnings in the market. Its
successful right issue to expand capacity, which also increased its outstanding
shares has helped to water down its earnings per share as its profit was down.
Also, the extension of its sales outlets to major capital cities of many states
did not reflect on its sales. On the strength of its 38 kobo third quarter EPS and expected
full year earnings per share of 50 to 60 kobo, the possibility of dividend cut
to the range of 40 to 50 kobo is high regardless its high yield. The stock trades at 23.68 times earnings and
a dividend yield of 7.78 per cent as at the end of trading in 2014.
This company is into planning, design and construction of civil engineering and building works. It has been consistent in rewarding its shareholders with
dividends. The company has potential to rally on the strength of its expected
full year result after the election. Also, the increasing number of different
construction contracts awarded to the company last year is likely to impact its
bottom line. This company is also likely
to benefit from the reforms agenda of any party that wins the election as
infrastructure remains a key factor to drive the economic diversification of
the country by any government that comes on board. The company’s stock trades
at 13.54 times earnings and the yield is 4.45 per cent. On the strength of its
third quarter EPS of N2.10 and full year forecast of N4.28, the dividend
possibility in the range of N2.50 to N3.00 is high. Traders and long term
investors should look the way of this stock.
The lower the price of this stock the more attractive it becomes with a higher
upside potential when the general market rebounds.
CCNN
This company is into cement manufacture and marketing. It has not been consistent in paying dividends in the last four years
due to undulating earnings performance; but it paid 70 kobo in 2013 financial
year. The company’s profitability level in the 2014 quarterly results has
improved. On the strength of its third quarter earnings per share of 138 kobo
that is already higher than 2013 full year EPS of 113 kobo, the possibility of
dividend in the range of 70 to 90 kobo or lower with a bonus is high as the
expected 2014 full year EPS is projected to be in the region of 150 to 155
kobo. It is expected that government at
the federal and state levels will strive to bridge the infrastructure gap to
drive economic growth and development in their reform policies after the polls. The company’s stock is trading at a
reasonable valuation with a strong profit margin. As at the end of trading in 2014,
this stock trades at 7.53 times earnings and with a dividend yield of 6.48 per
cent.
DANGOTE CEMENT
This is a leading cement producing
company in Nigeria that is fully
integrated with projects and operations in 14 other African countries. The company is the most capitalized stock on the exchange and
the most priced in its sector. The company has expanded its production capacity to
20 million metric tons per annum to boost sustainable development and profitability level. It has
continued to export cement and as well as meet the demand of the government and
private sector that are committed to infrastructural development in the effort to
bridge the existing gap. The company’s huge investment in capacity building will
yield outstanding returns for the medium and long term investor. On the
strength of its third quarter EPS of N8.26 and the projected full year EPS of
N12.00, the possibility of dividend in the range of N7 to N9 is high, The stock
trades at 24.21 times of earnings with a dividend yield of 3.50 per cent as at
the last trading day of 2014. The company is trading at a reasonable valuation
with improving profit margin. The construction industry is sure to benefit from
the government after the elections regardless of which party wins.
Healthcare
GSK
This is a pharmaceutical
company engaged in manufacturing and sale of healthcare products and beverages.
The company has raised its dividend payout for five years in a row. The stock
trades at 32.26 times earnings and yields 2.60 per cent as at the last trading
day of 2014. The company’s third quarter EPS of 155 kobo is a pointer to the
expected full year earnings per share being in the region of 210 to 225 kobo
and if achieved the possibility of a dividend of 130 to 150 is high.
Oil & Gas
This company is into oil marketing,
distribution and extraction. With strong financials that have supported its
increasing dividend payout for five years in a row, the stock remains well
positioned in the downstream oil marketing sector despite its many challenges,
including the continued free fall of crude oil price in the international
market. Total stock has a potential to rally on the strength of its strong
earnings and payout policy but investors looking the way of this sector now
should think long. With a third quarter EPS of N7.80 and full year forecast of
N10.23, dividend possibility of N7, in addition to its interim bonus of N2
earlier paid, is high. The stock trades at 18.56 times earnings with a dividend
yield of 8.22 per cent.
MOBIL
MOBIL
This company is into oil marketing,
distribution and extraction. At the same time, it is in real estate business
which of recent has started reflecting on its bottom line. The dividend increase by the company is on the
strength of its earnings in that particular financial year. The company remains well positioned in the
downstream oil marketing sector regardless of the many challenges facing its
industry especially now that oil price is falling. This stock has a potential
to rally on the strength of its strong earnings and payout. With a third
quarter EPS of N16.63 and full year forecast of N18.00, dividend possibility of
N10 is high. The stock is currently trading at 9.44 times earnings with a
dividend yield of 3.82 per cent.
UACN
This holding company has its hands in many listed
companies. It is into agriculture, manufacturing, property, paints, chemical
and distribution of consumer staple products. Yes, it has been consistent
in paying dividends but the payout has been up and down to reflect the earnings
position of the company at any given time. Due to its diversification in
investment and those of its subsidiaries, it is expected that its future
dividend payout might increase as profit from all its investment start impacting
on its bottom line. The stock trades at 12.10 times earnings and a dividend
yield of 6.23 per cent. On the strength of the company’s third quarter EPS of
232 kobo, the expected full year earnings per share is forecast to be in the
region of 300 kobo. If achieved, the likelihood of dividend in the range of 150
to 200 is high. With the upside potential of 40 percent after the polls
investors with short, medium and long term investments should look the way of
this stock.
Next week watch for INVESTDATA 10 VALUED STOCKS TO BUY IN
2015
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