Investment opportunities in fundamentally sound stocks

The market in the past few weeks has been bullish, except that it decline marginally last week due to profit taking. The positive vibration in the market was due to exceptional performance of quoted companies in their Q4 2021 earnings.  Prices of stocks moved up in response to the good performance recorded by these companies. As expected, investors will also take profit. That is why we saw a marginal decline in the All Share Index by 0.16 last week.

Audited reports are expected to soon hit the market with dividend declarations. Some companies that did not release their Q4 results are expected to release their Audited report latest by the end of February. Those who released Q4 results have up to the end of March 2022 to release their Audited reports.

Just as we have always reiterated that investment should be done against expectation, investors should start taking position ahead before the audited reports are released. Quite a number of quoted companies will declare dividend, so in order to take advantage of such, investors should start taking position.

We have always advised investors to take position in fundamentally sound stocks. This earnings season is another opportunity to take advantage of dividend paying stocks.

There are many fundamentally sound stocks one can consider for strategic positioning. To mention a few within the limited space of time, the following stocks are worth considering:

ZENITH BANK

Zenith Bank has consistently over the years paid dividend to its shareholders. The bank has also consistently recorded growth in its audited reports for the past five years.

Zenith Bank is expected to pay at least N2.70 as final dividend. A position in Zenith Bank will give a dividend yield of 10.04%, relative to its current share price of N26.90.

The Bank is trading below its book value of N37.81, which affirms an uptrend potential for Zenith Bank.

ACCESS BANK

The audited report of Access Bank is expected to be good as Q1, Q2 and Q3 earnings of the bank in 2021 were consistently impressive.

The Bank increased its interim dividend pay out to 30 kobo from 25 kobo. This implies that there is tendency for them to increase their final dividend to about 60 kobo from 55 kobo final dividend declared the previous year.

At the share price of N10.50, Access Bank is considered cheap as it is trading below its book value of
N22.49.

FBNH

The share price of FBNH closed at N11.20. It has gone as far N12.90 in the past 52 weeks. A position in FBNH has an uptrend potential of N13.19% relative to its year high of N12.90.

First Bank paid 45 kobo dividend for the year end 2020. There is every possibility that the Big Elephant will increase their dividend payout for 2021 financial year. 

With the book value of N20.99, relative to its current share price of N11.20, FBNH is considered cheap.

UBA

In 2020 financial UBA paid 35 kobo as final dividend in addition to 17 kobo interim dividend, making a total of 52 kobo as dividend payout.

In half year of 2021, UBA increased their interim dividend to 20 kobo as against 17 kobo interim that was declared the previous year. On the strength of increased payout of interim dividend, we expect UBA to improve their final dividend to at least 45 kobo.

At the current share price of N8.70, UBA is considered cheap as it is trading below its Book Value of N23.34.

DANGOTE CEMENT

The recent share buyback of Dangote Cement has moved the share price of the company to N274.8. This will translate to improved earnings per share of the company because the shares outstanding has reduced.    

Dangote Cement paid N16 dividend from the EPS of N16.14 in 2020 year end. We expect them to pay at least N16 dividend or more for 2021 year end.

With increased demand for cement in the country as a result of infrastructural development by government and individual projects, Dangote Cement remains the most patronized brand in the industry.

OKOMU

The share price of Okomu Oil last week dropped to N127.8 from N142 due to profit taking. This is another entry opportunity for discerning investors.

The company paid N7 dividend in 2020 year end from the earnings per share of N8.16. Based on its Q4 2021 earnings per share of N14.72, Okomu is likely to increase its dividend pay-out to around N10 when the audited report is released.