{"id":180382,"date":"2024-09-27T18:26:26","date_gmt":"2024-09-27T18:26:26","guid":{"rendered":"https:\/\/businessyield.com\/?p=180382"},"modified":"2024-09-27T18:26:28","modified_gmt":"2024-09-27T18:26:28","slug":"nigerian-stocks-that-pay-dividends","status":"publish","type":"post","link":"https:\/\/businessyield.com\/bs-investment\/nigerian-stocks-that-pay-dividends\/","title":{"rendered":"Top Nigerian Stocks That Pay High Dividends: Your Guide to Earning More from Investments","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"

Investing in the stock market is more than just buying low and selling high. For many investors, dividend stocks offer a reliable way to generate income alongside potential capital gains. Dividend stocks are shares from companies that regularly pay out a portion of their profits to shareholders. This system of receiving dividends provides investors with a consistent income stream, making dividend stocks especially attractive for those seeking long-term wealth growth or passive income. However, understanding how dividends work, along with the key dates and terms involved, is crucial for optimising their returns from these types of investments, and that is exactly what I’m going to help you with this article.\u00a0Let’s take a look at Nigerian stocks that pay dividends, shall we?<\/p>

Key Points<\/span><\/h2>\n\n
  • Dividend stocks provide regular income through profit payouts, making them appealing for long-term wealth growth and passive income strategies.<\/li>\n\n
  • Investors can receive dividends in different forms, including cash, stock, property, scrip, or liquidating dividends, each with its own benefits and risks.<\/li>\n\n
  • Key dates, such as the ex-dividend date and payment date, are essential for ensuring eligibility and maximizing returns from dividend payouts.<\/li>\n\n
  • Companies like Zenith Bank, SFS REIT, and GTCO are leading Nigerian stocks offering high dividend yields, making them strong options for investors seeking consistent returns.<\/li><\/ul><\/blockquote><\/div><\/div>

    What Are Dividend Stocks?<\/span><\/h2>
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    Dividend stocks are shares from companies that regularly pay out a portion of their earnings to shareholders in the form of dividends. These payments are a way for companies to distribute excess profits back to their investors. Typically, dividend stocks come from well-established companies with consistent profitability.<\/p>

    Investors often prefer dividend stocks because they offer both potential capital appreciation and regular income. Dividends can be paid quarterly, semi-annually, or annually, depending on the company\u2019s dividend policy.<\/p>

    Types of dividends<\/span><\/h2>
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    Whether you’re an experienced investor or just starting, understanding the different types of dividends can help you make better financial decisions. The types include: <\/p>

    #1. Cash Dividend<\/span><\/h3>

    A cash dividend is the most straightforward type of dividend, where a company distributes a portion of its earnings directly to shareholders in cash. The amount shareholders receive depends on the number of shares they own and the dividend declared per share. For example, if a company declares a 2 naira per share dividend and you own 100 shares, you will receive 200 naira in cash. This method is appealing to investors who seek regular income without needing to sell their shares.<\/p>

    Cash dividends are generally seen as a sign of a company’s financial stability and profitability. Companies that regularly pay cash dividends are considered well-established with consistent profits. However, cash dividends can also reduce the company\u2019s funds for future expansion and growth, potentially slowing down business development. <\/p>

    #2. Stock Dividend<\/span><\/h3>
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    A stock dividend differs from a cash dividend as shareholders receive additional shares instead of money. For example, if a company declares a 10% stock dividend and you own 100 shares, you would receive 10 more shares, bringing your total to 110. This increases your ownership in the company without you having to spend extra money.<\/p>

    Stock dividends allow companies to reward shareholders while conserving cash, which can be useful for future investments or paying down debt. Stock dividends can also dilute the value of each individual share, as more shares are issued, potentially lowering the stock price. However, they can enhance long-term value by increasing the number of shares an investor holds, which may be appreciated over time.<\/p>

    #3. Property Dividend<\/span><\/h3>
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    A property dividend involves distributing tangible or intangible assets instead of cash or stock. This can range from physical assets like real estate or equipment to non-physical assets such as intellectual property. <\/p>

    Property dividends are less common but can be a way for companies to distribute surplus or non-essential assets. For instance, a real estate company might distribute land or properties to its shareholders. While this can diversify an investor\u2019s portfolio and provide a unique type of return, the value of the distributed asset may fluctuate, and selling it for cash can be difficult, depending on the market.<\/p>

    #4. Scrip Dividend<\/span><\/h3>
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    A scrip dividend offers shareholders the option to receive dividends in the form of promissory notes, which can be redeemed for cash or stock at a future date. Essentially, the company is issuing IOUs to its shareholders because it may not currently have the cash reserves to pay out dividends immediately.<\/p>

    Scrip dividends help companies avoid immediate cash outflow while still rewarding shareholders. This can be useful in times when a company is temporarily cash-strapped but expects to generate enough revenue in the future to fulfil the dividend obligation. However, the risk lies in the possibility that the company might not be able to pay the dividend later if financial conditions worsen, making this type of dividend less appealing for risk-averse investors.<\/p>

    #5. Liquidating Dividend<\/span><\/h3>
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    A liquidating dividend is issued when a company is dissolving and selling off its assets. Unlike regular dividends, which come from profits, liquidating dividends are paid from the company\u2019s remaining assets after all debts and liabilities have been settled.<\/p>

    Liquidating dividends are typically the last payment a shareholder will receive from a company that is closing down. While it can offer a final return on investment, it usually signifies the end of the company\u2019s operations. This type of dividend is less common and generally only occurs when a company is winding down, so it\u2019s not a consistent source of income for investors.<\/p>

    Understanding Dividends and How Dividends Work<\/span><\/h2>

    Dividends represent a reward to shareholders for investing in a company. They can take various forms, including cash or additional shares of stock. Mutual funds and ETFs also distribute dividends to their holders. While cash dividends are the most common, dividends paid in stock or other assets are also possible. Shareholders must approve dividends, typically through a vote, making dividends a significant decision in the company\u2019s financial management.<\/p>

    The process begins with the company’s board of directors declaring a dividend. Once announced, the important dates to watch are the ex-dividend date (the cut-off for being eligible for the next dividend), record date (when eligible shareholders are confirmed), and payment date (when dividends are distributed). On the ex-dividend date, the stock price typically drops to reflect the payout. The terms necessary when understanding dividends include:<\/p>

    #1. Dividend Dates  <\/span><\/h3>
    • Announcement\/Declaration Date: The date the board of directors announces the dividend. <\/li>\n\n
    •  Ex-Dividend Date: The last day to own the stock to receive the upcoming dividend.<\/li>\n\n
    • Record Date: The company verifies who qualifies for the dividend.<\/li>\n\n
    • Payment Date: When shareholders receive the dividend.  <\/li><\/ul>

      #2. Dividend Yield<\/span><\/h3>
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      Dividend yield represents the ratio of a company\u2019s annual dividend to its share price. This is a critical metric for assessing how much return an investor is getting relative to the stock’s price. High dividend yields may indicate a stable income source for investors.  <\/p>

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