Forty-five of the 146 companies listed on the Nigerian Exchange Limited (NGX) have not paid dividends in at least five years, leaving investors holding “silent stocks” with little to no income return. According to a Nairametrics analysis, this means roughly one in every three quoted firms on the NGX has withheld cash rewards from shareholders over this period, raising concerns about consistent investor returns and corporate governance.
Dividends, representing a portion of a company’s profit distributed to shareholders, are often seen as a marker of financial strength. Regular payouts indicate that a company is profitable and committed to rewarding its investors, while also offering income-focused shareholders a reliable stream of returns. Analysts note that a strong dividend history is frequently as important as a firm’s growth potential when evaluating investment prospects.
The silent stocks span multiple sectors, including consumer goods, ICT, industrial goods, healthcare, insurance, and natural resources. Notable examples include International Breweries, Omatek Ventures, NCR Nigeria, Ellah Lakes, Premier Paints, and Thomas Wyatt Nigeria, many of which have not declared dividends for over a decade. Some of these companies, despite the absence of payouts, have recorded significant stock price rallies, highlighting a disconnect between market valuation and shareholder returns.
Financial analysts warn that non-payment of dividends can signal either unprofitability or strategic reinvestment. Companies such as FTN Cocoa and Ellah Lakes, for instance, have experienced recurring losses, while others like SCOA and International Breweries have posted profits inconsistently, yet continue to withhold dividends. Brokers like John Udoh of Arthur Steven Asset Management emphasize that investors must scrutinize company financials to understand the reasons behind such dividend droughts.
The persistence of silent stocks underscores a key challenge for NGX investors: price appreciation alone does not guarantee returns. While some firms show impressive market gains, the lack of dividend payments raises questions about long-term value creation. For investors, the lesson is clear—without sustainable profitability and consistent payouts, the dividend drought remains a significant risk, making careful stock selection and financial analysis essential for meaningful investment returns.
Source: Nairametrics