Why Companies Are Not Paying Dividends – Analysts

Stock market analysts have said that the reason why many quoted companies are not paying dividends as at when due to shareholders is because of the tough business environment in which they operate. About 28.13 per cent of the 192 companies listed on the Nigerian Stock Exchange (NSE) have not paid dividends in the past five to 15 years. According to the Managing Director of Lambert Securities Limited, Mr. David Adonri, “When investors invest, they expect to earn income from their investment. Dividend is the major income expected. Therefore, dividend forecast plays an important role in determining demand for company shares”. He pointed out that companies pay dividend from profit or in rare cases from reserve. Dividend policies also guide the amount of dividend usually paid by companies. He said that several companies are unable to pay dividends because of losses or re-injection of profit into expansion. Other experts adduced policy changes of government as reason who some companies are finding it tough to be profitable citing unstable monetary and fiscal policies by government. LEADERSHIP Sunday investigation revealed that 54 companies spread across different sectors of the NSE have not been paying dividends with some of them yet to pay dividends for over 10 years. Under the Alternative Securities Market (ASeM) out of the 10 companies listed on the sector, seven have not paid dividends to their shareholders. Livestock Feeds Plc listed under Agriculture sub-sector paid dividend last in 2001, while John Holts Plc under Conglomerate sub-sector paid dividend last in 2005. Under the Construction/Real Estate sub-sector, Arbico Plc and Cappa & D’Alberto paid dividend last in 1998 and 2008 respectively. The Beverages-Brewers/Distillers sub-sector, for instance, of the seven quoted companies, three have not paid dividend for up to 15 years. According to information gleaned from NSE daily equity page by LEADERSHIP, Champions Breweries Plc last paid dividend in 1986; Golden Guinea Breweries Plc, 1997; and Premier Breweries Plc, 1995.