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Monday, January 30, 2023

Buy Dangote Cement, Zenith Bank, Conoil, UBA on High Dividend Yields

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As companies will soon be rewarding their owners from distributable profit, it is important to identify defensive and high yielding dividend stocks.

At a time of low yields in the bond market, investors move in droves to dividend to generate income. Of course, the good thing is that this income can be reinvested to earn higher returns later.

According to a report from Afrinvest Securities, Dangote Cement, Zenith Bank, Conoil, and the United Bank for Africa (UBA) have a high Dividend Yield Index.

Zenith Bank has a dividend yield of 12.92 percent, and a price to earnings multiple of 2.92 makes its stock attractive. The bank’s strong earnings paved the way for it to pay a final dividend of N97.34 billion for 2021 financial year.

UBA’s stock has a dividend yields of 13.16 percent as the pan-African lender’s shareholders were paid a final dividend of N34.20 billion in 2021 as it continues to seek a high yielding risk asset across the continent.

It has a price to earnings ratio of 3.72 times, and it has a market capitalisation of N259.92 billion.

Conoil is the most attractive and highest dividend yielding stock among the downstream oil and gas firms, which means investors have confidence in the company’s growth potentials even amid a myriad of challenges.

The company has a dividend yield of 9.47 percent and a price to earnings multiples of 4.16 times, and a diversified revenue base makes it much easier for it to surmount macroeconomic headwinds.

However, foreign exchange scarcity and lack of transformation policies on the part of the outgoing administration have stifled growth. For instance, as a result of the foreign exchange crisis, the state oil corporation is the sole importer of petroleum products.

There is light at the end of the tunnel as some analysts are optimistic that a newly elected president will most likely remove subsidy and liberalise and completely deregulate the downstream oil and gas sector so that sector players can set their own price.

Dangote Cement, the most capitalised firm and largest producer of the building material in Africa’s most populous nation, has a dividend yield of 7.87 percent and a price to multiples of 14.99.

There are upside potentials for the stock as government proposed infrastructure spending and private sector investment in real estate are going to magnify the demand for cement.

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