Dividend Payout, IPOs and Bearish Market Trend - Proshare

Dividend Payouts, IPOs and Bearish Market Trend

May 20, 2012 / Proshare Research

Stock markets over the years have provided a veritable avenue for well known companies to raise new capital much more easily than they could try to otherwise, just by selling new stock issues to the wide public. Those who bought were almost exclusively those who had enough wealth and income that they could afford to take the risks involved in the expectation that they would then share through dividends paid on the stock in the profits made by the companies whose stock they bought. This worked up until the banking consolidation exercise of 2004-2007 which opened up the market to a larger number of retail but unsophisticated investors who saw dividend payments as an answer to the money markets. Over the ensuing years, and post the market crash, companies are now increasingly financing their new investments out of profits that they retain rather than paying it out in dividends. So the stock markets now exist largely to facilitate trading in outstanding issues of companies stock. In effect, stock market prices are now determined largely by speculators seeking capital gains. For a market that has traditionally been assessing value from dividend payments, the current bearish trend challenges this paradigm. Investors who expect to enjoy capital gains arising from share price appreciation on their investments now face a reversal of expectations. We ran a screen on capital gains/dividend per stocks for those with bearish sales trends. Analysis revealed that out of the forty (40) quoted companies listed between 2008 and 2010, thirty-seven (37) firms are trading below their listing prices while only three (3) stock are trading above their listing price. Starcomms Plc led the chart with -96.51% price declines in relation to its listing price while Daar Communications and Omatek Plc followed closed with -90.48% and 90.27% respectively. However, Pinnacle Point Group, Capital Hotel and McNichols Plc all recorded price appreciation of +10.14%, +4.31% and +4.08% respectively after their listing on the bourse.
Listing Dates 14-Jul-08 26-Sep-08 18-Jun-08 04-Jun-08 28-Nov-08 17-Sep-09 25-Apr-08 23-Jun-08 11-Sep-08 18-May-09 23-Jul-08 No of Shares Listed (bln) 6,878.48 8,000.00 2,941.79 1,500.00 4,893.59 20,585.00 8,679.15 3,211.63 3,553.14 4,237.27 2,200.00 Current Price (16-May-2012) 0.50 0.50 0.50 0.93 0.50 0.50 0.50 0.50 0.50 0.50 0.50

Compan(ies) STARCOMMS DAARCOMM OMATEK FIDSON MTI AFRINSURE ASOSAVINGS TANTALIZER UNIONDAC AFROMEDIA FTNCOCOA

Listing Price 14.33 5.25 5.14 7.87 4.00 3.67 3.67 3.67 3.00 2.92 2.85

% Return -96.51% -90.48% -90.27% -88.18% -87.50% -86.38% -86.38% -86.38% -83.33% -82.88% -82.46%

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Dividend Payout, IPOs and Bearish Market Trend - Proshare

CHAMS COURTVILLE BECOPETRO UNITYKAP MULTIVERSE PAINTCOM HMARKINS UNIVINSURE HONYFLOUR REGALINS GOLDINSURE PORTPAINT MTECH MULTITREX IAINSURE ABBEYBDS IHS DANGFLOUR BAGCO GTASSURE RESORTSAL NPFMCRFBK DANGCEM ETRANZACT SKYESHELT UHOMREIT MCNICHOLS CAPHOTEL PNG

24-Sep-08 01-Apr-09 07-Oct-09 17-Dec-09 08-Oct-08 02-Nov-10 22-Feb-08 11-Feb-08 20-Oct-09 27-May-08 12-Feb-08 09-Jul-09 09-Jun-09 01-Nov-10 09-May-08 21-Oct-08 27-Jan-09 04-Feb-08 09-Apr-08 19-Nov-09 23-Nov-09 01-Dec-10 26-Oct-10 10-Jul-09 26-Feb-08 02-Jul-10 18-Dec-09 14-Aug-08 17-Mar-09

4,620.60 2,960.00 3,716.98 13,000.00 4,261.94 792.91 6,000.00 16,000.00 7,930.20 6,668.75 4,549.95 400.00 4,966.67 3,722.49 28,000.00 4,200.00 4,400.00 5,000.00 6,215.00 10,000.00 13,175.73 2,286.64 17,040.50 4,200.00 20.00 250.02 201.89 1,548.78 4,579.78

2.62 2.62 2.5 2.38 2.15 3.90 1.94 1.94 8.50 1.75 1.89 10.00 2.50 3.00 1.36 3.89 5.25 15.00 4.09 3.00 0.95 1.50 135.00 4.8 105.00 52.50 0.98 6.50 6.61

0.50 0.50 0.50 0.50 0.50 1.00 0.50 0.50 2.25 0.50 0.55 3.60 0.91 1.10 0.50 1.44 2.35 6.95 1.99 1.57 0.50 1.07 112.00 4.47 100.00 50.00 1.02 6.78 7.28

-80.92% -80.92% -80.00% -78.99% -76.74% -74.36% -74.23% -74.23% -73.53% -71.43% -70.90% -64.00% -63.60% -63.33% -63.24% -62.98% -55.24% -53.67% -51.34% -47.67% -47.37% -28.67% -17.04% -6.88% -4.76% -4.76% 4.08% 4.31% 10.14%

Source: Proshare Research/NSE

Despite majority of the quoted companies recording price depreciation, some quoted firms rewarded investors with cash dividends or bonus shares which helped compensate for the capital losses recorded as a result of the wholesome price depreciations on the bourse. To the naked eye, the difference between an investment returning say 15% per annum and the one returning 17% per annum may not look like much in the near term. But as the time horizon increases, the difference keeps getting bigger. For instance, after 10 years, the investment yielding 17% per annum will have accumulated nearly 20% more money than the one with 15%. And after 20 years, the difference would have gone up by as much as 40%. Thus, when it comes to investing, even a couple of percentage points of extra returns matter. However, we routinely encounter cases where investors turn a blind eye to these facts. Nowhere is this more evident than in the case of dividends paid out. Ask most

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Dividend Payout, IPOs and Bearish Market Trend - Proshare

(retail predominantly) investors and they will say that they invest in stocks only because of the capital appreciation potential of the same. Dividends are seldom the decision drivers. However, from the example above shows, such investors are likely to end up paying a significant price for their dividend negligence over the long term. In 2010, out the eighty-four (84) companies that declared dividend or bonuses, fortyseven (47) recorded price appreciation, thirty-three (33) recorded price depreciation while four (4) closed flat. Berger Paints and Capital Hotels Plc led the gainers with +175% and +139.13% while Unity Kapital Assurance and Beco Petroleum Plc led the losers with -78.99% and -76.28% respectively.
Company Returns in 2010 Company Berger Paints Capital Hotels Plc Ashaka Cement Plc Ikeja Hotels Plc Julius Berger Plc Flour Mills Nigeria Plc Northern Nigeria Flour Mills Plc Nigerian Bottling Company Plc Dangote Flour Mills Plc Benue Cement Plc Skye Bank Plc Total Nigeria Plc Fidson Healthcare Plc Nestle Nigeria Plc Guinness Nigeria Plc Nigerian Breweries Plc Nigerian Bag Man. Co. Plc Mobil Oil Nigeria Plc Nahco Aviance Plc Red Star Express Plc National Salt Company Nig Plc Lafarge Wapco Plc Seven-Up Plc University Press Plc Conoil Plc Stanbic IBTC Bank Plc PZ Cussons Nig Plc Access Bank Plc Glaxosmithkline Plc Cap Plc A.G. Leventis Cement Co. of Northern Nigeria Vitafoam Plc Guaranty Trust Bank 10k N0.24 N2.00 80k N0.50 50k N1.00 N0.05 N8.28, 200k N0.22 N10.60 825k N1.50, 0.89k 13k N7.00 25k,45k 30k 50k N0.10 1.75k 40k 150k N0.30 86K 20k N0.75 N1.60k, N1.00 10k 10k N0.25k N0.75, 25k 1 for 4 1 for 3 1 for 10 1 for 4 1 for 5 1 for 10 1 for 5 Dividend Declared 50k N0.075 1 for 8 Bonus Declared Share Price 04-Jan-10 3.2 1.38 11.39 0.87 25.79 36.2 22.94 22.49 10.42 43.01 5.48 149 1.86 239.5 127.5 53 1.52 98.8 7.18 2.15 4.56 30 29.4 4.97 27.63 7.16 25 7.55 22.4 28 2.47 13 5.37 15.78 31-Dec-10 8.8 3.3 26.5 1.79 50 67.7 40.43 38 16.54 68 8.63 234 2.91 368.55 190.56 77 2.18 141 9.9 2.88 6.1 40 39 6.57 36.44 9.2 31.45 9.3 27.49 34.03 2.95 15.5 6.06 17.8 % Change 175.00% 139.13% 132.66% 105.75% 93.87% 87.02% 76.24% 68.96% 58.73% 58.10% 57.48% 57.05% 56.45% 53.88% 49.46% 45.28% 43.42% 42.71% 37.88% 33.95% 33.77% 33.33% 32.65% 32.19% 31.89% 28.49% 25.80% 23.18% 22.72% 21.54% 19.43% 19.23% 12.85% 12.80%

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Dividend Payout, IPOs and Bearish Market Trend - Proshare

Zenith Bank Plc Presco Plc Japaul Oil & Maritime Services Plc Custodian & Allied Insurance Plc FCMB Beta Glass Plc May and Baker Nigeria Plc Dangote Sugar Refinery Plc Fidelity Bank PLc FTN Cocoa Ecobank Transnational Plc UACN Plc Law Union & Rock Insurance Plc Courteville Guinea Insurance Plc Multiverse Resort Savings & Loans Plc Transnationwide Express Plc SCOA Plc Portland Paints Plc First Bank Plc MRS Nigeria Plc Smarts Products Nigeria Plc Roads Plc Continental Reinsurance Plc NCR( Nigeria) Plc UBA Adswitch Plc Abbey Building Society Plc Longman Nigeria Plc UACN Prop Starcomms Cutix Plc Guaranty Trust Assurance Plc Associated Bus Company Plc Academy Press Plc Oando Plc Afromedia Plc Boc Gases Airline Services and Logistics Plc Okomu oil Palm Plc C & I Leasing Plc Honeywell Flour Mills Plc Chellarams Plc Prestige Assurance Plc

N0.45 N0.20 N0.08 6 kobo 5k N0.36

1 for 4

13.5 5.6 1.18 2.86 7.01 14.26

15.01 6.22 1.31 3.15 7.7 15.58 4.2 16 2.7 0.57 15.7 37.56 0.52 0.5 0.5 0.5 0.5 6.4 8.71 5.55 13.7 66.56 1.43 3.01 1 7.3 9.17 1.9 1.33 7.3 16.02 1.45 2.21 1.59 0.53 3.87 66.2 0.56 9.2 1.72 14.5 1.61 5.1 8.08 2.2

11.19% 11.07% 11.02% 10.14% 9.84% 9.26% 8.81% 7.38% 7.14% 5.56% 4.67% 2.20% 1.96% 0.00% 0.00% 0.00% 0.00% -0.78% -1.14% -2.12% -2.14% -4.63% -5.92% -8.79% -13.04% -14.22% -15.17% -17.39% -17.39% -19.16% -19.34% -19.44% -26.33% -27.06% -27.40% -28.33% -29.57% -30.00% -31.75% -35.09% -36.26% -39.25% -40.00% -42.82% -45.00%

2 for 5 N1.00 N0.025 N3.50k 0.3cents N1.30k 3k 4k 1k 1k 0.01k 5k N0.10 12k N0.10 1.25k 9k N0.45 5.5k 5k N0.10 2 kobo 4k 50k 50k Nil 12k 4k 3k 7k N3.00 N0.05 N0.30 10k N0.30 2k 11k 8k 10k 1 for 3 1 for 2 1 for 4 1 for 5 1 for 8 1 for 4

3.86 14.9 2.52 0.54 15 36.75 0.51 0.5 0.5 0.5 0.5 6.45 8.81 5.67 14 69.79 1.52 3.3 1.15 8.51 10.81 2.3 1.61 9.03 19.86 1.8 3 2.18 0.73 5.4 93.99 0.8 13.48 2.65 22.75 2.65 8.5 14.13 4

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Dividend Payout, IPOs and Bearish Market Trend - Proshare

Goldlink Insurance Plc RT Briscoe Plc Poly Products Plc Beco Petroleum Unity Kapital Assurance Plc Source: Proshare Research/NSE

2k N0.10 8k N0.01 1 for 19 1 for 5

0.91 6.15 4.45 2.53 2.38

0.5 3 1.95 0.6 0.5

-45.05% -51.22% -56.18% -76.28% -78.99%

In 2011, seventy-nine (79) firms declared cash and bonus dividends with very few recording positive share price movement. Of this number, fourteen (14) quoted firms that declared dividends recorded price appreciation, while sixty (60) firms recorded price decline, with the remaining five (5) closing flat.
Company Returns in 2011 Company Roads Plc Capital Hotels Plc Okomu Oil Palm Plc NCR Plc Guiness Nigeria Plc Presco Plc Airline Services & Logistics Plc Nigerian Breweries Plc Nestle Nig Plc Seven-Up Bottling Co. Plc Unilever Nigeria Plc Abbey Building Society Plc Neimeth Plc Lafarge WAPCO Plc Consolidated Hallmark Insurance Plc Courtville Investment Plc Regency Alliance Insurance Plc Royal Exchange Plc Sovereign Trust Insurance Plc Portland Paints Plc Tantalizer Plc Flour Mills Plc GTAssure Plc Dangote Cement Plc Nem Insurance Plc ABC Plc IHS Nig Plc Aluminium Extrusion Ind. Plc MRS Oil Plc Stanbic IBTC Bank Plc Law Union & Rock Plc PZ Cussons Plc 0.03 16 kobo 2k 2.00 9k 2.25 0.05 2kobo, 3k 6k 5kobo 1.25k 39k 5kobo 0.86 1 for 4 Dividend Declared 50k 0.075 100k, 50k 3.00 10.00 0.2, 0.50 15k 1.25k 10.60kobo, 1.50k 200k 1.10 5kobo 0.05k 25kobo 3kobo 4.5k 2k 1 for 8 1 for 5 Bonus Declared Share Price 04-Jan-11 3.01 3.3 15.2 6.94 190.56 6.85 1.72 77.32 368.55 39 26.1 1.33 1.01 41 0.5 0.5 0.5 0.5 0.5 5.28 0.53 70 1.52 120 0.59 0.55 2.86 12.39 66.56 9.39 0.57 32.01 30-Dec-11 8.69 6.78 23.1 9.31 250 8.67 2.17 94.42 445.66 46.47 29 1.44 1.08 43.25 0.5 0.5 0.5 0.5 0.5 5.11 0.5 65.45 1.42 110.77 0.54 0.5 2.59 11.15 59 8.3 0.5 28 % Change 188.70% 105.45% 51.97% 34.15% 31.19% 26.57% 26.16% 22.12% 20.92% 19.15% 11.11% 8.27% 6.93% 5.49% 0.00% 0.00% 0.00% 0.00% 0.00% -3.22% -5.66% -6.50% -6.58% -7.69% -8.47% -9.09% -9.44% -10.01% -11.36% -11.61% -12.28% -12.53%

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Dividend Payout, IPOs and Bearish Market Trend - Proshare

Conoil Plc Nigerian Enamelware Plc Chellarams Plc Continental Reinsurance Plc Niger Insurance Plc UAC Plc Red Star Express Plc Total Nigeria Plc Zenith Bank Plc GTBank Plc Vitafoam Nig Plc Custodian & Allied Insurance Plc BOC Gases Plc Nigerian Bags Manufacturing Company Plc Smart Products Plc UPDC Plc Cutix Plc ETI Plc National Salt Coy of Nigeria Plc Julius Berger Plc NPF Micrrofinance Bank Plc First Bank Plc Academy Press Plc AIICO Insurance Plc AG Leventis Plc Trasnationwide Plc Northern Nig Flour Mills Plc FCMB Plc University Press Plc Fidelity Bank Plc Nacho Aviance Plc Access Bank Plc Honeywell Flour Mills Plc Prestige Assurance Plc Unity Bank Plc CAP Plc Skye Bank Plc RT Briscoe Plc Ashaka Cement Plc Longman Oando Plc Dangote Sugar Refinery Plc Dangote Flour Mills Plc UBA Plc

2.00 42k 10kobo 7.5k 1 for 10 1.10 0.30 600k, 200 85k 75k,25k 30 kobo 7k ( Interim) 36k 13kobo 0.12k 55 kobo 12k 0.4cents 50k 2.00 5k 0.60k 7.5 5kobo 12k 5k 90k 35k 35k 0.14 40k, 15k 0.20k, 30k 13k 0.06 0.5k 2.00 0.40 10k 30k 0.25 N3.00 60k 20k 5k 1 for 4 1 for 4 1 for 5 1 for 6 1 for 20 1 for 1 1 for 2 1 for 4 1 for 4 1 for 4

36.44 42.66 7.6 1 0.6 38.13 2.97 234 15.39 18.26 6.5 3 9.2 2.3 1.43 16.51 2.21 15.7 6.09 50 1.78 14.19 3.68 0.9 2.54 6.4 39.88 7.79 6.5 2.82 10.2 9.97 5 2.09 1.26 34.03 9.08 2.9 27.83 7.3 67 16 17.1 9.5

31.5 36.19 6.43 0.84 0.5 31.18 2.39 188.1 12.18 14.25 5.06 2.28 6.85 1.7 1.04 12 1.55 10.5 4.01 31.6 1.12 8.9 2.2 0.5 1.38 3.45 21.48 4.18 3.4 1.46 5.14 4.8 2.31 0.94 0.55 14.5 3.84 1.22 11.3 2.95 22 4.7 5 2.59

-13.56% -15.17% -15.39% -16.00% -16.67% -18.23% -19.53% -19.62% -20.86% -21.96% -22.15% -24.00% -25.54% -26.09% -27.27% -27.32% -29.86% -33.12% -34.15% -36.80% -37.08% -37.28% -40.22% -44.44% -45.67% -46.09% -46.14% -46.34% -47.69% -48.23% -49.61% -51.86% -53.80% -55.02% -56.35% -57.39% -57.71% -57.93% -59.40% -59.59% -67.16% -70.63% -70.76% -72.74%

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Dividend Payout, IPOs and Bearish Market Trend - Proshare

Fidson Healthcare Plc Diamond Bank Plc Paints & Coatings Plc Source: Proshare Research/NSE

10kobo 15k 6k

3.06 7.87 3.36

0.79 1.92 0.52

-74.18% -75.60% -84.52%

As at April 2012, forty-nine (49) quoted firms have declared dividends of various amounts. Based on the price return analysis done on those companies as at 11th May, 2012, twenty-one (21) of such stocks recording price appreciations while twenty (20) recorded a depreciation in share price, with the remaining eight (8) closing flat till date.
Company Returns in 2012 Dividend Declared 8 kobo 1.50k 1.00k 25k 3.00k 70k 1 for 50 10k 3 for 20 10k 80k 95kobo 3.00 30k 0.08k 1.25k 0.4cents 1.50k 11.05k (Final), 1.50k (Int) 75k 8k 0.025 6k 0.7k 5 kobo 4 Kobo 2k 1.40k 5k 5.00k 2k 2.40k 5k 5k 1 for 5 1 for 20 1 for10 1 for 5 1 for 5 Share Price 03-Jan-12 11-May-12 0.52 14.5 8.67 5.39 9.31 4.07 2.6 1.01 4.1 1.22 9.07 12.3 95.03 5.23 1.35 110.77 10.5 31.48 423.38 43.25 0.8 0.5 0.52 6.78 0.5 0.5 0.5 29 0.5 133.91 1.12 31.6 3.45 11.15 1.05 24.3 13.65 8.16 13.8 6 3.81 1.31 5.25 1.52 11.3 14.99 112 6.01 1.55 121.5 11.5 34.01 439.95 44.94 0.82 0.5 0.52 6.78 0.5 0.5 0.5 29 0.5 132.9 1.07 30.1 3.28 10.6

Company

Bonus Declared

% Change 101.92% 67.59% 57.44% 51.39% 48.23% 47.42% 46.54% 29.70% 28.05% 24.59% 24.59% 21.87% 17.86% 14.91% 14.81% 9.69% 9.52% 8.04% 3.91% 3.91% 2.50% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% -0.75% -4.46% -4.75% -4.93% -4.93%

Paints & Coatings Mfg. Plc CAP Plc Presco Plc Nacho Plc NCR Nigeria Plc Nascon Plc UBA Plc Sterling Bank Plc FCMB Plc RT Briscoe Plc First Bank Plc Zenith Bank Plc Nigerian Breweries Plc Dangote Flour Mills Plc GTAssure Plc Dangote Cement Plc ETI Plc UAC of Nig Plc Nestle Nig Plc Lafarge Wapco Plc Continental Reinsurance Plc Afromedia Plc AIICO Insurance Plc Capital Hotels Plc Courteville Bus. Solutions Plc Sovereign Trust Ins. Plc Tantalizer Plc Unilever Nigeria Plc UTC Nigeria Plc Mobil Oil Plc NPF Microfinance Plc Julius Berger Plc Trans-Nationwide Exp. Plc Aluminum Extrusion Ind. Plc

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Dividend Payout, IPOs and Bearish Market Trend - Proshare

Fidelity Bank Plc UAC Propety Devt Co. Plc Ashaka Cement Plc Nem Insurance Plc Beta Glass Plc Skye Bank Plc AG Leventis Plc GlaxoSmithKline Plc Stanbic IBTC Bank Plc Custodian & Allied Ins. Plc Total Nigeria Plc Portland Paints Plc Vitafoam Plc Japaul Oil & Maritime Plc MRS Oil Plc Source: Proshare Research/NSE

14k 0.65k 40k 5k 0.40k 25k 14k 1.20k 0.10k 8k 7.00k 20k 30kobo 2k 70k

1.43 12 11.61 0.56 12.71 3.9 1.38 23 8.02 2.34 188.1 5.11 5.31 0.94 59

1.33 11.01 10.49 0.5 11.1 3.35 1.17 19 6.62 1.8 138.95 3.42 3.51 0.57 35

-6.99% -8.25% -9.65% -10.71% -12.67% -14.10% -15.22% -17.39% -17.46% -23.08% -26.13% -33.07% -33.90% -39.36% -40.68%

Thus, as we have seen, dividends not only help propel investment returns over the long term, they also help generate sizeable returns during periods when the stock markets go through lean times. Little wonder, dividend paying stocks remain a must have in one's portfolio. Yet this trend is changing and investors should be aware. It is time to start adjusting expectations and note that the promise of dividend in offers or private placements ahead of listings may not be guaranteed.

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