Why nearly half of Nigeria’s listed companies paid no dividends in three years

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At least 60 of about 136 listed companies on the Nigerian Exchange (NGX) haven’t paid dividends for at least three years in the five years from 2021 to 2025, PREMIUM TIMES has found.

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That compares with 51 companies in the half-decade period to 2021, when the number of quoted stocks was 156 (including ETFs), as reviewed in a previous PREMIUM TIMES report.

A deep dive by PREMIUM TIMES showed that many Nigerian stocks don’t pay dividends for a variety of reasons, including strategic, regulatory, and policy-related factors.

Some companies’ choice not to offer dividends to shareholders is not necessarily a drawback, nor is it a regulatory breach that authorities should look out for to sanction non-compliant firms.

No rule exists anywhere in the country that obligates companies to always pay dividends to equity investors.

Companies such as Austin Laz, Cadbury, Caverton, Chams, Chellarams, Daar Communications, Dangote Sugar, Critical Minerals Financing Corporation (formerly Deep Capital), Ellah Lakes, Nigerian Enamelware, Eterna, ETranzact, Eunisell, Fortis Global, FTN Cocoa, Golden Guinea Breweries, Unity Bank and Guinness didn’t pay dividends regularly as they had been held back by negative retained earnings for years.

So also did International Breweries, Japaul Gold, Juli, Livestock Feeds, Mutual Benefits, Morison Industries, Multi-Trex, Nigerian Breweries, NCR Nigeria, Neimeth, Nestle, NSL Tech, Oando, Omatek, Premier Paints, PZ Cussons, Royal Exchange, RT Briscoe, SCOA, Tantalisers, Thomas Wyatt, Union Dicon, Universal Insurance, UPDC, Veritas Kapital, Coronation Insurance.

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African Alliance, Afromedia, Ekocorp, Pharma Deko and STACO Insurance have not issued their audited accounts since at least 2022. On that ground, they have been unable to announce dividends.

The rest of the pack – from Briclinks Africa, Champion Breweries, Honeywell Flour, Ronchess Global Resources and John Holt to underwriters like Lasaco Assurance, Prestige Assurance, Regency Alliance and Sovereign Trust Insurance – are taking the long view, preferring to plough back profits into their operations rather than constantly share dividends to stockholders.

Companies ideally pay dividends from retained earnings, which aggregate the profits they have amassed over time.

In this review, companies like Aradel Holdings, Transcorp Power, Haldane McCall, VFD Group, Mecure Industries, Legend Internet and Zichis Agro Allied Industries were exempted because they attained public company status from 2023 onwards and are therefore too new to be fairly assessed by the yardstick of consistent dividend history.

The list also doesn’t account for exchange-traded funds (ETFs) or new listings within that time range, which didn’t offer dividends for three years at a minimum.

Top roadblocks

That a significant number of Nigerian public companies didn’t distribute cash dividends to shareholders over the five years ending in 2025 doesn’t validate the likelihood that they don’t take dividend payments seriously.

Among the hindrances to the potential of Nigerian quoted companies to pay dividends, loss-making ranks at the top of the pile, corporate reports’ data show.

Only nine of the companies under review for not paying dividends at all or not doing so consistently from 2021 to 2025 reported profits throughout that period or for most of it.

They comprised Bricklinks Africa, Champion Breweries, Honeywell Flour Mills, John Holt, Lasaco Assurance, Prestige Assurance, Regency Alliance, Ronchess Global Resources and Sovereign Trust Insurance.

That little changed from what happened in the 5 years to 2021, when the number of those that didn’t pay dividends was 5.

Nigeria’s corporate law prohibits public firms from posting losses when paying dividends, on the view that they must prioritise recovery over shareholder reward by channelling their financial resources towards restoring operations to profitability before other considerations.

“A company may, in a general meeting, declare dividends in respect of any year or other period only on the recommendation of the directors. The company may, from time to time, pay to the members such interim dividends as appear to the directors to be justified by the profits of the company,” says Section 426, Subsections 1-2 of CAMA 2020, the corporate legal framework governing businesses in Nigeria

“Subject to the provisions of this Act, dividends are payable to the shareholders only out of the distributable profits of the company,” it states further.

The sweeping FX reforms President Bola Tinubu introduced on taking office, specifically the various naira devaluation rounds between June 2023 and February 2024, spurred colossal losses among import-dependent businesses and companies with foreign-currency exposures.

From telcos like MTN Nigeria to consumer goods manufacturers like Nigerian Breweries, Guinness, PZ Cussons, Nestle, and Cadbury, the implications were dire and radical, at times forcing multinationals like GSK and Procter & Gamble to close shop and desert the country.

The financial distress that resulted led to wide-scale losses across sectors outside financial services, turning retained earnings into red, in turn hurting companies’ capacity to pay dividends.

“Not until 2025 did we see that companies started to find their footing back, with the exchange rate now more stable, the monetary authority now having more legroom to be able to defend the naira,” Oyindamola Oyenuga, investment research analyst at Meristem Securities, told PREMIUM TIMES.

She holds the position that the fact that a company doesn’t pay dividends for a certain period is a case of having to understand why that is so, noting how consumer goods stocks like Unilever and also UACN were paying dividends before the FX crisis erupted, halting the trend.

“During that period, there were lots of sell-downs on consumer goods stocks; they were hard hit. Many investors took their profits. They sold off consumer goods stocks. But now, we are seeing that (dividend payment) return. Investors responded negatively to the fact that companies were not paying dividends, and that was largely anticipated,” she remarked.

Yet, macroeconomic limitations are not the only brick wall to companies’ dividend distribution plans. Regulation sometimes throws spanners in the works.

That played out in the Central Bank of Nigeria (CBN)’s order to banks in June 2025, demanding that those with forbearance loans refrain from paying dividends until they purged their balance sheets of toxic assets.

Big banking institutions such as Access Holdings, First HoldCo, and United Bank for Africa, and mid-tier lender Fidelity Bank, finished the year without paying a dime to shareholders, breaking with a corporate tradition they had religiously maintained for years.

It was in light of this regulatory stringency and the frustration it provoked in shareholders expectant of a handsome payout for 2025 that Access Holdings chairman, Aigboje Aig-Imoukhuede, stepped in to calm nerves last month at the annual general meeting.

The banking group, Nigeria’s largest public company by assets, hit a revenue milestone of N5.5 trillion and scaled up total assets by almost a quarter to N51.6 trillion in the last financial year. Likewise, its pre-tax profit crossed the N1 trillion mark in the period, making it one of only three lenders to achieve that.

“Without a doubt, those results do not speak to an institution that cannot pay a dividend. Of course, we can pay a dividend,” Mr Aig-Imoukhuede told shareholders in reassurance.

“It therefore implies that we were restricted from sharing dividends with our shareholders for specific reasons,” he stated further.

One of those was the fact that the group was still carrying forbearance loans in its portfolio during the year.

That said, fresh complications have arisen beyond the constraint imposed by the urgency of compliance with forbearance loan rules on lenders willing to distribute dividends.

In the spirit of international best practices, the CBN is now asking that banks’ investment in subsidiaries be 10 per cent or less of shareholders’ funds.

Until lenders enforce the rule, dividend distribution is out of the question, the Nigerian banking industry top watchdog has said.

It is particularly compounding the ordeal of bank holdcos like Access Holdings, where aggressive expansion into verticals like payments, pensions and consumer lending has been at fever pitch in the last few years.

Corporate character factors

Across the globe, companies that are extremely passionate about growth, by nature, rarely focus on immediate shareholder value, which is largely anchored in regular cash distributions.

As part of their corporate philosophy, companies of this stripe are inclined to invest the bulk, if not all, of their profits back into their operations.

In this case, expansion is a top priority, and a readiness to wait for investment to deliver long-term returns is almost always a virtue that potential investors in such companies must imbibe.

That especially applies to technology companies, given that their operations are, by default, capital-intensive.

The pressure of growth requires them to commit a substantial outlay to developing key infrastructure and bringing their services and solutions up to speed with the latest trends and developments in a pretty dynamic, fast-paced industry, where consumers’ tastes and preferences change at the speed of light.

Against this backdrop, US tech titans like Amazon, Twitter, Netflix, and Tesla don’t pay dividends.

Companies running a residual dividend policy are typically growth-oriented, and tend to focus on capital expenditures and working capital needs more than paying dividends.

The orientation of these firms is that every available cash should be put to use, either to facilitate capital projects or for cash distribution rather than being held.

In this class is Access Holdings, which in recent years has used the lion’s share of its retained earnings to drive a formidable pan-African expansion, unmatched by any Nigerian company, and broadly branch out beyond its core banking business into other promising sectors within financial services.

Investors often see growth stocks as holding prospects of capital appreciation, which usually make up for the dividends they hardly pay.

To meet the listing needs of such companies, the NGX has set up a dedicated listing segment called the Growth Board, which admits companies with relatively small market capitalisation and promise for growth.

It is specially designed for technology firms and SMEs across different sectors of the economy.

On the face of it, growth stocks, judging by their price-to-earnings (PE) ratio, which is characteristically high, are expensive.

But that usually conceals the ultimate value of those stocks, which their current worth doesn’t reveal and which is the number one attraction of investors, whose orientation is towards growth rather than value.

PE ratio, a fundamental analysis metric, compares a company’s current share price with its earnings per share, indicating how much investors are paying for every dollar/naira of profit a company makes.

“I think I said at the last AGM, ‘shareholders who don’t have the time to wait for dividends, this is not the company for you,’” Chuka Mordi, the chief executive of Lagos-listed agro-processor Ellah Lakes, told CNBC Africa in February.

He was emphasising his company’s prioritisation of growth above everything else, its tenacity to pass over shareholder value for now to save up ample cash that is able to pivot the company through its current expansion phase and out of the perennial loss-making and a negative cash flow that have hammered operations for years.

Whether through dividend payment or capital appreciation or both ways, a stock must have a means of compensating investment for people to find it worth investing in.

“If a company “takes up a strategy that they want to expand, for example Access Bank or you see that UACN is expanding and they’ve acquired CHI, that gives the prospect that this company is expanding their operations and are going to get bigger or they’ll have a wider reach in the market,” Ms Oyenuga said in response to whether stocks that don’t pay dividends stand a chance of capital appreciation.

According to her, the products of such companies will ultimately enlarge and, for that reason, it is going to trickle down to sales and eventually profitability.

Investors leverage such updates within the company or the growth plans the company is pursuing, she noted, which are usually priced in when buying the stock.

“Certain policies could be taken, certain directions could be taken by management or certain strategies could be put in place in order to facilitate growth. Investors respond to that, and it could drive capital appreciation,” she added.