Shareholders of Nestle Nigeria will smile to the bank this year as the food and beverage company has announced it will pay a total of N70 per share as dividends for the 2020 financial year.
This is equivalent to a payout ratio of 141.5 percent, according to MoneyCentral calculations. Nestle had already paid an interim dividend of N25 per share last year, and it is set to pay a final dividend of N45 per share making a total of N70.
The dividend payout is 10.2 percent higher than 2019 levels when Nestle paid N63.5 per share in dividends. The directors proposed that N5.00 and N6.00 of the dividends come from the after tax retained earnings for the year ended 31 December 2019 and 31 December 2018 respectively.
This is because Nestlé’s profits for 2020, fell by 14 percent to N39.2 billion, while the declared dividends will gulp N55.48 billion, meaning a 100 percent payout ratio and more is required for the announced dividends.
The extra dividends will be paid from the retained earnings of the firm. Nestle had retained earnings of N28.75 billion at the end of 2020. The announced dividend is equivalent to a yield of 4.82 percent.