Market sells down dividend paying stocks on low yield

0
294

 

The few reports we’ve seen hitherto could by all standard be declared stellar, with some beating investors’ expectations as regards to their performances and dividend payouts. The market’s reactions to some of this equity prices however may not have been congruent with the above claim, as we saw dividend paying stocks’ prices drop sharply, shortly after dividend pronounced. Not to worry, according to hints from experts, the market is merely reacting to the force that has disagreed with the current dividend yield, considering the current prices of some of those equities too high in relation to its dividend declared, hence a little adjustments and corrections here and there.  What investors really need to find out is if the alleged low dividend payout was as a result of a weak financial strength or an attempt to conserve capital and reinvest into the growth of the company. It is therefore necessary to know that dividend payout or yield may not suffice to determine the future return on any equity.

Guaranty Trust Bank

GT Bank’s Q4 2017 results were published on the 14th of March 2018, but not ahead of that of its keen competitor, Zenith bank. The reports came in strong with a 24% improvement on its 2016 full-year reported topline of N262.4billion to settle at the current N327.3billion.

The results also showed that the company’s post-tax profit grew by 28.8% y/y from N132.2billion to N170.4billion in the corresponding period.

Its earnings per share for the period under review consequently stood at about N6 as against the previous N4.49 per share, which represents about 8% year on year growth.

The PE ratio stood at 8.1X with earnings and dividend yield at 12.25% and 5.07% respectively.

GTB stock’s price as since the release of its full-year scorecard declined by about 5%, from N47.30 to about N44.9 it closed last Friday despite its impressive reports with N2.40 dividend declared.

In respects to the N2.40 dividend declared, the register of shareholders will be closed on Wednesday march 28, 2018, with 27th of march, 2018 as its qualification date.

On Tuesday 10th of April, dividend will be paid electronically to the qualified shareholders and Annual General Meetings holds same day at the prestigious Oriental Hotel, Lekki.

Stanbic IBTC

For the South African owned bank, the grin mixed with puzzled looks of many investors is to ask why the company’s share price remain firm despite of the low dividend payment when compared with its industry peer.

The fact remains that, with the small outstanding number of shares and the company shares highly concentrated in the hands of few that may not want to sell, the share earns a natural value and may enjoy new entrant barrier’s benefits.

Its financial statements for the year ended December 2017 revealed that Gross earnings increased by 35.81% from N156 billion in 2016 to N212 billion in 2017. Profit before tax increased by 64.38% from N37.2 billion in 2016 to N61.1 billion in 2017 and Profit after tax also increased by 69.4% from N28.5 billion in 2016 to N48.3 billion in 2017.

Earnings per share moved from about N2.46 in 2016 to N4.60 in 2017.

Its PE ratio currently stands at 10.21x, with 9.80% earnings yield.

The Holdings Company declared an interim dividend of 50kobo per share. It had earlier declared an interim dividend of 60kobo per share.  The total dividend paid thus amounted to N1.10. This seems rather low compared to other banks such as GT and Zenith, which typically pay close to 50% of their earnings as dividends.

MCNICHOLS PLC

Mcnichols reported 11.58% decline in turnover from about N1billion in 2016 to about N967million in 2017.

Its post-tax profit also stood 33.9% below the previous year N57.8million, to arrive at N38.2million as at the end of period 31st December 2017. 

Earnings per share consequently dropped from 18kobo to 12 kobo in the corresponding period.

The PE ratio currently stands at 10.26x.

The company has declared a 3kobo per share final dividend to its shareholders to be paid on the 24th of April 2018, with a qualification date of March 19th 2018.

 ZENITH BANK PLC

Of course there is no better no better equal to compare Zenith with except GT Bank, the are both of the same league and reputable class of their own. Though Guaranty is ahead of Zenith talking of the their equity prices, but there has always been an infinitesimal disparity in their behavioral pattern that the move of one can predict the other.

Zenith Bank Plc released its financial statements for the 12 months ended December 2017 shortly ahead GTB.

According to the results, Gross earnings increased from N507 billion in 2016 to N740 billion in 2017, representing a 46% YnY growth.

Profit after tax also rose 37.24% from N129 billion in 2016 to N177 billion in 2017.

Consequently, Earnings per share also increased from N4.12 in 2016 to N5.66 in 2017.

The bank recommended a final dividend of N2.45, bringing total dividend paid for the 2017 financial year to N2.70. This equates to a 47% payout ratio.

Zenith bank has a PE ratio of 5.47x with a 18.28% earnings yield and 7.9% dividend yield as at when computed.

Register will be closed between April 4 and 9, 2018. Both days inclusive, with April 3rd as the qualification date and April 13th as the payment date.

Annual general meetings holds in Abuja on the 13th of April, 2018.

 

Share

LEAVE A REPLY

Please enter your comment!
Please enter your name here