These stocks present investors with an opportunity to enjoy both substantial dividends and significant share price appreciation as they gear up for a strong performance in 2024.
- Zenith Bank: This banking giant stock currently offers a yield, surpassing 10%, making it one of the highest on the NGX.
- Mansard: Despite being a penny stock, Mansard stands out with a robust dividend yield and a promising growth trajectory.
- Okomu Oil: This palm oil company currently provides a healthy yield, and its impressive 9M post-tax profit growth adds to its appeal.
- Access Holdings: The Tier-1 bank boasts of a track record of consistent dividend payments and an impressive 29.81% dividend Compound Annual Growth Rate (CAGR) over the past 5 years.
- UBA: This banking stock currently offers a relatively strong yield, and its earnings for the first nine months of 2023 have more than doubled.
Dividends provide a reliable return on capital, offering a steady stream of investment income to shareholders. This attribute makes dividends a crucial consideration, particularly for individuals living in retirement.
However, dividends can be tricky. High-yielding dividends are sometimes associated with stocks whose share prices are lagging or underperforming the broader market.
Typically, as share prices decrease, the dividend yield, calculated as the dividend payment divided by the share price, tends to rise; buttressing the inverse relationship between share price and dividend yield.
The challenge lies in identifying stocks that strike a balance between appreciating share prices and a robust dividend payout.
Identifying such stocks may pose a challenge, but they certainly exist. Presented here are dividend stocks that offer a blend of both growth and income, positioning themselves for significant upward momentum in 2024.
Zenith Bank
The most capitalized bank offers investors one of the highest-yielding dividends, currently at 10.18%.
However, there are other reasons to like Zenith Bank stock beyond the dividend. The company has been reporting improving earnings. In 9M 2023, the bank reported one of the highest pre-tax profits.
Furthermore, the company has shown signs of a share price recovery in 2023 after experiencing a year-to-date loss of 4.57% in 2022. This positive momentum is expected to be sustained into 2024.
The post-tax profit for Zenith Bank experienced a significant growth of 149%. This substantial increase reinforces the optimistic outlook for the company’s performance.
In the second and third quarters of this year, Zenith Bank announced earnings per share (EPS) of N7.19 and N3.29, contributing to a trailing twelve-month EPS of N15.41.
Gross earnings also saw a significant rise of 114% from the previous year, reaching N1.329 trillion, 63% higher than the full-year gross earnings in 2022.
The bank’s cash and cash equivalents at the end of the 9M 2023 period increased by 42% to N2.71 trillion. This strong cash position is a positive factor that can provide support for the payment of dividends, enhancing the overall appeal of Zenith Bank stock to investors.
AXA Mansard
The insurance and asset management company provides a dividend that is better-than-industry/sector average. Shareholders of the company received an annual dividend payment of N0.42 per share giving it a yield of 9.15%.
Over the past five years, Mansard has consistently paid dividends for four consecutive years. Despite facing a 35% year-on-year decline in Profit After Tax (PAT) in 2022, the company paid out 133% of its earnings in dividends. This marked a substantial 44% growth in dividend payments.
The company increased its PAT by 738% to N12.555 billion in 9M 2023. This figure significantly outpaces the N2.435 billion recorded for the entire 2022 fiscal year.
The positive trend observed in the first three quarters is expected to persist into the fourth quarter, providing a strong foundation for an anticipated increase in dividend payments.
Considering the consistent dividend payouts, even during challenging periods, and the substantial growth in PAT, there is a compelling case to believe that AXA Mansard is well-positioned to sustain and potentially increase its dividend in 2024.
Okomu Oil
The increase in Okomu Oil’s share price by about 46% Year-to-Date (YtD) in the current year, following a gain of 16% in 2022, suggests a positive trend in the market’s perception of the company.
Investors are showing increased confidence in Okomu Oil, as reflected in the upward movement of its share price.
The dividend yield of Okomu Oil is noted to be relatively good at 8.54%. This implies that Okomu Oil is providing investors with a return of 8.54% on their investment through dividends.
The palm oil producer has a good dividend payment record. It has paid dividends consistently over the past years, boasting of CAGR of 48%.
In 2022, it distributed 122% of its earnings in dividends, showcasing an impressive 163% dividend growth rate.
The financial performance of Okomu Oil in 2022 was impressive, with a 41% growth in Profit After Tax.
This positive trend has continued in 2023, with post-tax profit increasing by 16% Year-on-Year to N20.921 billion, surpassing the N16.231 billion recorded for the entire 2022 fiscal year.
Given the consistent dividend payments, robust dividend growth rates, and the company’s strong financial performance in 9M 2023, there is a compelling indication that Okomu Oil is well-positioned to potentially increase its dividend in 2024.
Access Holding
Access Holding share price has been impressive this year; boasting a year-to-date gain of 102.94%.
Despite this substantial increase, the share price offers a compelling dividend yield of 9.28%, making it one of the highest on the NGX.
Over a five-year period, dividend payments have grown by about 30% per year. Even in 2022, when there was a slight decline of 5% in PAT, it paid out 35% of its earnings in dividends, representing a 50% growth rate in dividends for that year. This year, it has declared and paid an interim dividend of N0.30 per share.
Access is also a consistent performer when it comes to financial performance. Most recently, the company announced a 9M EPS of N6.92 and gross earnings of N1.593 trillion. That beat 2022 full-year gross earnings of N1.388 trillion.
Moreover, the robust net cash flow generated from operating activities, totalling N1.406 trillion, adds further strength to the company’s ability to sustain its dividend payment trend.
The substantial net cash flow from operating activities is a crucial factor in supporting the company’s dividend payments.
UBA
United Bank for Africa (UBA): UBA has demonstrated an exceptional 173% Year-to-Date growth in its share price, coupled with an appealing dividend yield of 6.75%, resulting in an overall impressive total return of 179.77%.
This surge in the share price appears to find solid support in the bank’s fundamental strength. In the first nine months of 2023, UBA reported the highest post-tax profit on the NGX, with a 287% Year-on-Year growth in Profit After Tax.
Over the past five years, UBA has consistently rewarded shareholders with dividend payments, maintaining an average annual growth rate of 5.29%.
In 2022, the bank increased its dividend payments by 10% YoY, and this positive trend has persisted into the current year, with UBA elevating its dividend payment by an impressive 67%.
The substantial growth in dividend payouts during the H1 2023 period, coupled with the remarkable earnings growth experienced so far this year (likely to surpass the 2022 full-year figure), suggests a promising outlook for dividend increases in 2024.
