As the half-year 2024 earnings season approaches, investors and shareholders still expect interim dividends, despite the escalating losses reported by listed companies in 2023 that extended into Q1 2024 due to policy shifts and other macroeconomic headwinds.
This optimism might stem from the companies’ interim dividend payment trends and the still impressive performance by some of the listed companies in Q1 2024, which beat forecasts and are likely to surpass 2023 figures.
Data from companies surveyed by Nairametrics reveal that, based on their 2023 trends and performance so far this year, these companies will likely pay interim dividends for the half-year 2024.
Generating passive income from quality dividend stocks is particularly appealing when the NGX All-Share Index (NGXASI) and component stocks are in decline.
Specifically, the NGXASI has dropped by 4.61% from its Q1 2024 position to 33.39%, although this is still higher than the 6-month YtD gain of 19% recorded in 2023.
Stocks projected to pay interim dividends for the half-year ending June 30, 2024 include SEPLAT (+49.35%), PRESCO (+86.01%), OKOMU (+1.92%), ZENITHBANK (-7.12%), UBA (-14.23%), STANBIC (-25.34%), GTCO (+8.64%), ACCESSCORP (-17.93%), FIDELITYBK (-8.76%), and CUSTODIAN (+8.89%).
By investing in each of these stocks, investors can expect to earn dividend income that would counteract the declining capital gains noticed in some of these stocks.
SEPLAT is performing well this year, with a YtD gain of 49.4%, recently trading at a 52-week high of N3,450.
- Seplat Energy has a consistent quarterly dividend payment record. Last year, it paid 3 cents per share for each quarter and a special 3-cent dividend in Q4, with varying exchange rates, resulting in a total of N145.24 per share.
- This trend has continued in 2024, with a 3-cent dividend, or N44.54 per share, paid for Q1, despite reporting a loss after tax of N2.9 billion.
- The company paid out N85.55 billion in dividends in 2023, representing a 105% payout ratio. With robust retained earnings of N232 billion, it is likely to maintain its dividend payment in Q2, following its established trend.
- SEPLAT’s stock currently offers a yield of 4.21%. Coupled with the share price gain of 49.4%, it presents a reasonable total return for investors.
PRESCO: It has been a good run for PRESCO, which has seen its stock move from a 52-week low to N359 high. It has an impressive YtD gain of 86% this year and offers a dividend yield of 10%,
- In the previous financial year, PRESCO distributed an interim dividend of N2 and a final dividend totaling N34.3 billion, which equated to a payout ratio of 110.5% of its post-tax profit of N32.86 billion.
- As of Q1 this year, PRESCO has already achieved 73% of that profit figure. This sets a promising precedent for potential dividends in the current.
- However, Presco must monitor its payout ratio to ensure sustainability. With a dividend sustainable growth rate of -6.02%, this suggests likely limitations in sustaining dividends without external resources.
Custodian Investment Plc, formerly known as Custodian & Allied Insurance Plc, is also likely to pay an interim dividend.
- Last year, the company paid an interim dividend of 15 kobo and a final dividend of 65 kobo. Supported by its relatively payout ratio in 2023, and impressive performance in Q1 2024 set the stage for optimism.
- By Q1 2024, Custodian Investment Plc has already achieved more than half of its 2023 post-tax profit of N81.5 billion and has exceeded the half-year post-tax profit of N6.285 billion recorded in 2023.
- Additionally, the share price is trading at a good yield of 8.61%, making the stock particularly attractive to income-focused investors seeking reliable dividend income.
Okomu Oil, a leading palm oil producer, has a consistent interim dividend payment history and is likely to continue this trend in 2024.
- Last year, the company paid an interim dividend of N4.50 and a final dividend of N14 per share, totaling N18.50 per share or N17.649 billion, with a payout ratio of 85.5%.
- By Q1 2024, Okomu has already achieved 75% of its 2023 post-tax profit of N20.647 billion and is on track to surpass its 2023 half-year profit of N22.905 billion.
- With a sustainable growth rate of 8%, these positive metrics are likely to be maintained.
- The share price offers a dividend yield of 7%.
Access Holding may pay an interim dividend for the half-year 2024, despite CBN directives to banks not to pay dividends from FX gains.
- In 2023, Access paid N74.645 billion in dividends, consisting of a 30 kobo interim dividend and a N1.80 final dividend, representing just 12% of its post-tax profit.
- With its strong performance in Q1 2024, investors are optimistic the bank will continue this trend.
Fidelity Bank paid N27.210 billion in dividends last year, consisting of a 25 kobo interim dividend and a 60 kobo final dividend, representing a modest payout ratio of 27%.
- With a dividend sustainable growth rate of 19% and a post-tax profit of N31 billion already achieved in Q1 2024, there is optimism that Fidelity will maintain its dividend trend in 2024.
- With a year-to-date share price decline of 8.8%, sustaining its dividend trend would enhance total returns.
GTCO GTCO recorded a significant N457.125 billion post-tax profit in Q1 2024, much higher than the N94.2 billion dividend paid in 2023, which comprised a 50 kobo interim dividend and a N2.70 final dividend.
This strong financial performance suggests GTCO may continue its robust dividend payments in 2024.
UBA, with a high dividend yield of about 13%, paid the second-highest total dividend of N95.8 billion in 2023, following Zenith Bank’s N125.588 billion.
Investors expect UBA to continue its 2023 dividend payment trend due to its strong financial position and high yield.
Stanbic IBTC recorded the highest payout ratio (34%) among the banks in 2023, comprising both interim and final dividends.
With its Q1 2024 profit nearing the N48 billion dividend paid in 2023, the bank is well-positioned to maintain its dividend payment history.
Zenith Bank recorded the highest post-tax profit of N676.909 billion among the banks.
Having already achieved the total dividend paid in 2023 within Q1 2024, Zenith Bank is in a strong position to sustain its dividend payment history and is likely to pay an interim dividend for the half-year 2024.