Let’s say you own a small bakery in your neighbourhood. After selling bread and cakes all month, you make a profit. Instead of keeping all that profit for yourself, you decide to share part of it with your friends who helped you start the bakery.
That’s basically how dividends work in the stock market only this time, the “friends” are the shareholders (people who own shares in the company), and the “profit” is shared as cash.
Some companies on the Nigerian Stock Exchange don’t just make money for themselves they also give part of their profit back to investors. That’s why many Nigerians prefer dividend-paying stocks: they’re like an investment that can pay you while you wait for its value to grow.
What Are Dividends?
A dividend is a portion of a company’s profit that’s distributed to shareholders.
It involves:
- Capital gains – This is money you make when you sell your stock at a higher price than you bought it.
- Dividends – This is money the company gives you simply for holding the stock, whether you sell or not.
For example:
If Zenith Bank Plc announces that it will pay ₦5.00 as dividend for each share and you own 2,000 shares, your dividend will be:
2,000 shares × ₦5.00 = ₦10,000
And the best part? You still own your 2,000 shares after getting the ₦10,000 as dividends.
Which Nigerian Stocks Pay Dividends?
While not all companies in Nigeria pay dividends, several blue-chip (big and well-established) companies are known for consistent payouts. Some top examples include:
- Zenith Bank Plc – One of Nigeria’s largest banks with a long history of high dividend payouts.
- GTCO Plc (Guaranty Trust Holding Company) – Another banking giant with regular dividend payments.
- MTN Nigeria Communications Plc – The telecom giant that shares part of its profits with shareholders.
- Dangote Cement Plc – A major player in the cement industry with a strong dividend history.
- Seplat Energy Plc – An energy company that often pays attractive dividends.
These companies are favourites among dividend investors because they have both profitability and consistency.
Why Do Companies Pay Dividends?
Companies pay dividends for several reasons:
- Rewarding investors – It’s their way of saying “thank you” for investing your money.
- Building trust – Regular dividends show that a company is financially healthy.
- Attracting more investors – Dividend-paying companies often have strong reputations, which can make more people want to buy their shares.
How to Receive Dividends in Nigeria
If you buy shares of a dividend-paying company, here’s how to make sure you get your money:
- E-Dividend Registration – Link your bank account to your shares through the e-dividend portal so the money goes directly to your account.
- Right timing – Make sure you own the stock before its “closing date” (called the qualification date) so you qualify for the payment.
Example: If Zenith Bank’s qualification date is March 10th, you must own the shares before that date to receive the dividend.
Conclusion
Not every Nigerian stock pays dividends, but for those that do, it’s like having an investment that works for you in two ways it can grow in value and put money in your pocket.
Whether it’s Zenith Bank, GTCO, MTN, Dangote Cement, or Seplat Energy, dividend-paying stocks are worth considering if you want consistent returns without selling your shares.
So, the next time you open your Trove app, look out for companies with a history of strong dividend payments. Because in investing, it’s not just about waiting for the tree to grow; sometimes it’s about enjoying the fruits along the way.
