Amid the bearish equities market, the Nigerian Association of Securities Dealers Over-the-Counter (NASD-OTC) has advised investors to seek for unquoted stocks that have recorded significant returns of not less than 70 per cent in the last two years.
In a statement made available to Vanguard, NASD-OTC said: “Amid the bearish equity market over the past two years, the shares of Central Securities Clearing System, CSCS rallied strongly, gaining over 70 per cent over the past two years, delivering a stellar return to its shareholders. The performance of the stock partly reflects the steady dividend payment culture of the Company.”Notwithstanding the share price rally, the N0.70 per share dividend declared by the CSCS translates to 5.8 percent yield on the share price of N12.00 as at the close of market on Friday, 07 February, 2020.
NASD said: “Beyond the steady cash flow that the CSCS dividend provides to investors, the strong fundamentals of the company has been a compelling attraction to investors.”Reacting on its performance, the CSCS said: “We posted N6.1 billion profit before tax in 2018 and poised for growth in 2019 full year, FY based on the quarterly performance, our diversification strategy has proven effective. Renowned for our strong governance, stable profitability and increasing earnings diversification, CSCS remains a prime toast of investors. Despite being unlisted, the stock attracts notable liquidity on the NASD Over-the-Counter.”
Meanwhile, following two consecutive years of bearish performance, the Nigerian equity market is recovering fast in recent time, with the Nigerian All Share Index rallying four percent Year-to-Date, YtD. Market operators have attributed the stellar performance of the market in January 2020 to a number of factors, including low valuation of stocks, high dividend yield expectations and increased allocation to equities by fund managers, who seek higher return on investment, following notable moderation in yields on fixed income instruments.
Notably, a number of banking stocks on the Nigerian Stock Exchange, such as Zenith Bank, UBA, GTBank have dividend yields in excess of 10 percent, reinforcing the attraction for equities.