What blue-chip stock investors should look out for amid heightened political risk
The heightened political tension has no doubt sent jitters down the spines of investors in the country. For smart retail and institutional investors, this period of a relative drop in prices of some blue-chip companies offers an opportunity to take position and own a stake in cheap but fundamentally-sound companies.
A retail investor should always gun for stocks with the dual capacity of regular dividends payment and attract capital appreciation. This week we bring you a list of some bellwether stocks which investors can take advantage of a slight drop in their prices and possibly own a stake.
Zenith Bank Plc
Tier one lender, Zenith Bank is the largest bank by asset base in Nigeria, and one of the most consistent dividend payers out there. It has consistently delivered profits for over 20 years and continues to remain a reliable financial institution. However, its dominance in the industry has not translated to dominance in capital appreciation for investors. Zenith Bank remains up in there with the others and hasn’t done badly either. At its current share price of N22.95 as at Friday, it trades at a price-earnings ratio of 3.94x. The bank pays dividends twice a year ( Full Year and Interim Dividend) and hopefully this year will not be different.
GT Bank at a share price of N33.70, and its Price-Earnings ratio at 5.2x and a consistent dividend payer over the years. The bank has been able to define its market, focusing on the youthful population. The model of the bank is very clear and they have a well-articulated strategy they use in actualising goals associated with this model. The bank’s corporate governance culture is worth emulating by other quoted companies.
Guaranty Trust Bank also has a good risk assessment framework which has enabled the bank to keep its Non-Performing loan (NPL) ratio lower than the for most of its peers, although in H-1 2018, the NPL was some 5.8 percent which was above the regulatory benchmark of 5 percent.
In addition, the tier one lender has one of the lowest costs of funds in the industry buoyed by its large customer base of the youthful working class population who have also contributed to the growth of its non-interest income which has been on the back of improved transactions over GTB’s digital channels.
NASCON Allied Plc
A member of the Dangote Group, Nascon has paid dividends to its shareholders for over six years now and just last year it proposed a dividend of N1.50 per share up from 70Kobo in 2017 representing an increase of 115 percent. Currently, trading at N17.90 as at Friday, Nascon is not only a good dividend stock, it also rewards investors in terms of capital appreciation. 5 years ago, this stock was trading at N9 per share, thus it has also demonstrated a capacity to reward shareholders over a long period of time.
Beta Glass Plc, one of Nigeria’s glass makers, has provided shareholders with a larger return on their investment inform of dividend and share appreciation. The company is among the thirty most capitalized firms-NSE 3O firms- in Africa’s largest economy. It was one of the best-performing stocks in 2018, gained by 33.1%. Beta Glass Company Nigeria Plc recorded a dividend growth rate of 145% in 2017 after paying a dividend of N0.98 per share compared with the N0.4 dividend paid in 2016. The growth in dividend continues for this company into 2018 with a dividend of N1.07 paid in June 2018.
Currently trading at N82.00, Okomu Oil Palm Plc paid a dividend of N3.00 in 2017 as against its 2016 dividend of N1.50, resulting in a 100% dividend growth. Thanks to favourable government policy. This growth rate is exceptional and it does look like investors should expect such growth to continue in 2019.
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