Forgive us for remembering the afro beat street banger Cash App, by Bella Shmurda, Zlatan Ibile and Lincoln when looking at the top people set to cash out from the N3 per share dividend announced by Zenith Bank last week.
However, while Shmurda’s hit song is an ode to street life and hustle by often young and jobless Nigerians, investors in Zenith Bank (such as Jim Ovia, the chairman and largest single shareholder) have been building the bank up for the latter part of 30 years and now cleaning up handsomely.
Jim Ovia, founder and Chairman of Zenith Bank Plc, will be paid N15.21 billion in dividend out of distributable profit for the year 2020, according to MoneyCentral calculations.
The (N15.21 billion) income is 16.56 percent of N94.20 billion total dividend payment (and interim payment) of the entire company whose owners expect a minimum required rate of returns on their investment since they are risk takers.
Ovia, who owns prime real estate across Nigeria, and mobile telecom operator Visafone, which has 3 million subscribers, has 5.072 billion shares (direct and indirect) in Zenith Bank, which means he controls 16.11 percent of the lender’s total shareholdings of 31.40 billion ordinary shares.
The shareholders of Zenith Bank have approved a final dividend of N2.70 for every share of N0.50 (bringing the total dividend of the financial year ended December 31, to N3) subject to appropriate withholding tax.
The chart below shows Jim Ovia’s dividend income has grown by 71.20 percent over the past six years, and he has gotten a combined N76.90 billion from distributable profit from 2015 to date.
During the crescendo of the coronavirus pandemic that grounded commercial activities to a halt, the International Monetary Fund (IMF) and the World Bank advised banks to suspend or slash dividend payment and share buybacks so as to protect their capital positions.
However, halting dividend payments may not go down well for many retail and institutional investors, who rely on bank dividends for regular income.
For instance, Zenith Bank has a consistent dividend payment, an attractive yield that guarantees to magnify an investor’s earnings.
Over the past six years, the lender has paid its directors a combined N474.64 billion, according to data gathered by MoneyCentral.
Zenith Bank has a dividend yield of 11.47 percent, while price to earnings ratio stood at 3.96 times as of 2:00 pm in Lagos.
Bella Shmurda, Zlatan, fans of their music and young Nigerians, may have to begin to look at Ovia for inspiration, as well, as investing in Zenith Bank shares is looking like the authentic cash app.