In a year marked by economic headwinds and cautious corporate stewardship, Nigerian companies have struck markedly different notes in their dividend policies. While manufacturers have delivered record distributions—often remitting nearly all of their profits to shareholders—the banking sector has chosen a more restrained approach, retaining capital to bolster resilience.
Generous Payouts from Cement and Food Producers
At the forefront of the shareholder-friendly trend are heavyweights in cement and consumer staples. Dangote Cement led the charge, declaring a ₦30-per-share dividend that translated into a staggering ₦502.6 billion payout—99.9 percent of its ₦503.3 billion profit after tax. Remarkably, this mirrors 2023’s near-total distribution (110 percent of earnings) and underscores the company’s unwavering commitment to investor returns, even as it retains over ₦1 trillion in earnings for future projects.
Not far behind, BUA Cement returned 93.9 percent of post-tax profits (₦69.4 billion) to shareholders via a ₦2.05-per-share dividend. Despite a 10 percent slide in its share price this year, the company signaled confidence in its cash flow and balance sheet. Meanwhile, BUA Foods stepped up its generosity, allocating 88 percent of its ₦266 billion profit (₦234 billion) to dividends—more than double its 2023 distribution.
These outsized payouts reflect not only robust cash generation but also a deliberate choice by industrial chiefs to reward equity holders amid lingering macroeconomic uncertainties. Yet the strategy poses a question: with so little profit retained, who will finance the next wave of capacity expansion?
Power and Prudential: A Balanced Approach
Beyond cement and food, Geregu Power and Africa Prudential struck intermediate positions. Geregu lifted its 2024 dividend to ₦8.50 per share—77 percent of its ₦27.4 billion profit—building on a record 125 percent payout the year prior. Majority-owned by Amperion Power Distribution, the utility’s yield offers modest relief to investors, even as its share price drifts.
Similarly, Africa Prudential maintained its steady hand with a total ₦0.75-per-share distribution, equal to 68 percent of earnings. Although its shares have slid over 33 percent this year, the almost 5.5 percent yield provides a buffer for income-focused portfolios.
Banks Hold Back for Stability
In stark contrast, Nigeria’s banks have largely opted to conserve capital. Fidelity Bank topped the sector with a 32.4 percent payout ratio, while giants like GTCO, UBA, and Zenith hovered between 4 and 30 percent. Such restraint signals a priority on shoring up buffers against potential loan losses and regulatory demands, rather than maximizing current dividends.
Despite their lower payout ratios, banking stocks still present attractive yields—ranging from around 3 percent in the larger banks up to double digits for select regional players. For income seekers, this blend of yield and prudence may prove more sustainable in the long run.
What It Means for Investors
The divergence between manufacturers and banks offers investors a clear choice: immediate income from high-yielding industrial stocks, or steadier, perhaps more resilient returns from the financial sector. High payouts in cement and food suggest companies flush with cash but potentially foregoing reinvestment, while banks’ conservative stance may underpin future growth through fortified balance sheets.
As Nigeria navigates global uncertainties—from commodity price swings to currency volatility—the spectrum of dividend policies underscores differing philosophies on growth and shareholder value. For now, investors must weigh the lure of generous dividends against the prospects for reinvestment-fueled expansion. In either case, the dividend payout ratio remains a vital barometer of corporate priorities—and in 2024, it has never been more telling.