Investors will generate more cash flows in form of dividend income from owning stock or shares in Zenith Bank than they will get from any other lender in Africa or in the wider Emerging Market (EM) universe.
Zenith Bank’s dividend yield presents a buying opportunity for investors that crave for high yields, as the stock remains cheap trading at a price to book ratio of 0.60 times.
Zenith Bank has a dividend yield of 16.60 percent, which compares to United Bank for Africa (15.20 percent); Guaranty Trust Bank (11.20 percent); KCB (Kenya) 10.0 percent; Access (10.0 percent);
Others are: Stanbic IBTC Holdings, (9.80 percent); First Rand (7.60 percent); Banca (Romania) 5.60 percent; QNB (Qatar) 3.30 percent; VTB (Russia); GCB (Ghana) 1.80 percent; CIB (Egypt) 1.80 percent, and ITAU (Brazil) 0.70 percent.
The dividend yield–displayed as a percentage–is the amount of money a company pays shareholders for owning a share of its stock divided by its current stock price.
The Nigerian Stock Exchange (NSE) All Share Index (ASI) has lost 5.78 percent since the start of the year, as investor apathy towards equities continues on the back of lack of transformation policy on the part of the Buhari led administration and poor corporate results.
Zenith Bank and a few other lenders are yet to release Q2, 2020 results which could be a catalyst for financials to rally.
Interestingly, the stock market lull is in tandem with economic activities.
The second quarter (Q2 2020) GDP figure from the National Bureau of Statistics (NBS) shows the economy contracted by -6.10 percent.
The economic downturn was majorly driven by the border closure imposed by government to curb the influx of substandard and cheap import and the lockdown and social distances imposed by government to contain the spread of the coronavirus pandemic.
The International Monetary Fund (IMF) has forecast that the Nigerian economy would witness a deeper contraction of 5.4 percent and not the 3.4 percent it projected in April 2020.
However, analysts expect the gradual reopening of the economy to drive an uptick in activities.
Zenith Bank stock is up 10.42 percent in the past year.