When it comes to investing, a key consideration for most investors is the return on investment. In the Equities market, one of the several ways for investors to earn returns on their stock position is by earning dividend payments on their holdings. Dividends are a percentage of a company's earnings that is paid to its shareholders as their share of the profits. Dividends are generally paid annually, with some companies paying quarterly and semi-annually. The amount paid is decided by the company’s board of directors, based on the company's most recent earnings, and may be paid in cash or additional shares. A publicly traded company that regularly shares profits with shareholders through dividends is called a dividend stock.

There are several reasons why a company pays dividends, part of which is that it indicates that a company is doing well and has generated good profits. This in turn reflects positively on a company and help maintain investors’ trust. Dividends can account for a significant portion of investors’ total return over time and the steady income from dividends can help smooth out a stock’s total return over the period.

Dividend-investing strategies to consider when seeking to invest in dividend stocks include:

1) The company’s dividend per share, which shows the number of dividends distributed by the company for each share of stock during a certain time period and which allows an investor to see which companies are able to grow their dividends over time;

2) The dividend yield, which is a measure of the company’s annual dividend divided by the stock price on a certain date. Considering the dividend yield is a key investment strategy, as it evens the playing field and allows for a more accurate comparison of profitability on dividend stocks.

From our analysis, we have discovered that historically, dividend stocks are concentrated in sectors such as Banking and Financial Services, Consumer Goods, Industrial Goods, Telecommunications and Oil & Gas. The chart below shows the list of select top 20 dividend stocks on the Nigerian Exchange Group (NGX) ranked by the 3-Year average dividend yield.

Brief on Top 5 Dividend Stock

JAIZBANK: Jaiz Bank PLC is the biggest provider of Islamic banking products and services in the country. The Bank offers services such as savings, current, salary, and kids savings accounts, as well as working capital, real estate, personal, medical, education, travel, and project finance. JaizBank also provides online banking, leasing, cards, and bonds and guarantee, benefiting from stable cash flows and margins.

ZENITHBANK: Zenith Bank PLC is a most capitalized commercial bank on NGX, and second biggest bank by assets base, with offices located in several parts of Nigeria. The Bank provides services to corporate, commercial and individual customers, benefiting from high interest income and low debt-to-assets.

GTCO: Guaranty Trust Holding Company PLC is the most digitalized bank, provides banking services, offers online and internet banking, loans, and asset management services with heavy presence in all states in Nigeria and in 9 African countries like Cote D'Ivoire, Gambia, Ghana, Kenya, Rwanda, Tanzania etc., with presence in United Kingdom hence, benefiting from diversification and FPIs attention radar.

LEARNAFRCA: Learn Africa PLC in the printing/publishing sector, Learn Africa publishes, distributes, and markets educational books across all states in the country, having competitive advantage over peers like Academy press, University press etc.

SFSREIT: SFS Real Estate Investment Trust is a real estate investment trust company that invests in real estate properties such as residential estates, commercial properties, and other assets across the country. One of the perks of investing REITs is the policy of paying larger portion of their annual profit as dividends to shareholders.

Whether you’re a newbie or an experienced investor seeking relatively stable dividend income in the Nigerian equities market, be rest assured that we are here for you. If you need expert help and tailored investment plans, team up with CSL Stockbrokers Ltd. Our staff is ready to assist you get the most out of your investments and secure your financial future. Begin your investment journey with CSL Stockbrokers Ltd now.

Important Risk Warnings and Disclaimers

CSL Stockbrokers Limited ("CSLS") is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange. CSL Capital (UK) Ltd (Firm Reference Number: 913994, Registered Number: 11818051), trading in the name of 'CSL Stockbrokers' for its activities, is authorized by the Financial Conduct Authority (FCA).

Both CSLS and CSL Capital (UK) Ltd are members of the FCMB Group ("the Group") of Nigeria, a group of companies which also includes First City Monument Bank Ltd.

RELIANCE ON THIS PUBLICATION FOR THE PURPOSE OF ENGAGING IN ANY INVESTMENT ACTIVITY MAY EXPOSE YOU TO A SIGNIFICANT RISK OF LOSS. By receiving this article, you will not be deemed a client or provided with the protections afforded to clients of CSLS and CSL Capital (UK) Ltd. When distributing this article, CSLS, or any member of the Group is not acting for any recipient of this article and will not be responsible for providing advice to any recipient in relation to this document. Accordingly, CSLS or any member of the Group will not be responsible to any recipient for providing the protections afforded to its clients.

If you are in the UK, you are a person to whom either Articles 19 or 49 of the Financial Services and Markets 2000 (Financial Promotion) Order 2005 apply or a person to whom this communication may otherwise be lawfully made.

This document is not an offer to buy or sell or to solicit an offer to buy or sell any securities. This document does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The appropriateness of a particular investment will depend on an investor's individual circumstances and objectives. The investments and shares referred to in this document may not be suitable for all investors.

CSLS or any other member of the Group may effect transactions in shares mentioned herein and may take proprietary trading positions in those shares and may receive remuneration for the publication of its research and for other services. Accordingly, this document may not be considered as objective or impartial. Additionally, information may be available to CSLS, or the Group, which is not reflected in this material. Further information on CSLS' policy regarding potential conflicts of interest in the context of investment research and CSLS' policy on disclosure and conflicts in general are available on request.

This document is based on publicly available information obtained from sources which CSLS believes are reliable, but which it has not independently verified. Neither CSLS, or their advisors, directors or employees make any guarantee, representation, or warranty as to the accuracy, reasonableness or completeness of this information and neither CSLS or their advisors, directors or employees accepts any responsibility or liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The opinions contained in this document are subject to change without notice and are not to be relied upon and should not be used in substitution for the exercise of independent judgment.

Past performance is not a guarantee of future performance. Investments may go down in value as well as up and you may not get back the full amount invested. Where an investment is denominated in a currency other than the local currency of the recipient of the research report, changes in the exchange rates may have an adverse effect on the value, price or income of that investment. In case of an investment for which there is no recognized market it may be difficult for investors to sell their investment or to obtain reliable information about their value or the extent of the risk to which they are exposed.