Dividend yield of stocks on Ghana Stock Exchange

dividend yield ghana

Earlier this year, I wrote about dividend payments of selected stocks on the Ghana Stock Exchange. In the same post, I mentioned the importance of dividend yield as a comparison criterion of how well dividends are paid by different stocks. Generally, it would be deceptive to compare just the dividend figures of two different stocks and conclude that one stock pays better dividend than the other. This is mainly due to the varying differences in the prices of various stocks. Note that dividends are paid per each share owned by an investor. Thus, to earn a meaningful dividend income, one must own an appreciable number of stocks. Now, imagine purchasing equal number of stocks of two different companies such as GOIL and AGA (AngloGold Ashanti Limited). GOIL and AGA currently trade at about GH¢2 and GH¢37 per share respectively. Hence, to purchase 100 stocks each of GOIL and AGA, you would require at least GH¢200 and GH¢3700 respectively. In a way, you need to invest more in AGA in order to own equal number of stocks as GOIL. Let’s assume that GOIL and AGA decide to pay GH¢0.06 and GH¢0.12 respectively as dividends to their shareholders. Owning 100 stocks each of GOIL and AGA imply that you would earn GH¢6 and GH¢12 from GOIL and AGA respectively. Comparing these amounts at face value, one may be tempted to conclude that the AGA’s dividend is twice better than the GOIL’s dividend. Nevertheless, don’t forget that you invested only GH¢200 in GOIL to earn the dividend income of GH¢6 while you invested a whooping GH¢3700 in AGA to earn the GH¢12. As you can see, it is surely better to earn GH¢6 on a GH¢200 investment in comparison to earning GH¢12 on a GH¢3700 investment. To avoid such deceptive comparisons of dividend payments, dividend yield is rather used.

By definition, dividend yield is dividend expressed as a percentage of a stock price. That is, Dividend yield = (dividend per share/price per share) × 100. Due to the continuous fluctuation of stock prices, dividend yield is normally estimated in reference to a stock’s closing price for a particular period (such as a financial year). Also, dividend yields of a present financial year are usually calculated based on the dividend payments for the previous financial year. For instance, to estimate the dividend yield of GCB bank for the 2016 financial year, one can utilise GCB’s dividend payment for the 2015 financial year (which was GH¢0.33/share) and GCB stock’s closing price for the same period (GH¢3.79). Thus, dividend yield of GCB bank for 2016 financial year = (0.33/3.79) × 100 = 8.7%

A stock’s dividend yield may depend on many factors such as the business sector, cash flow as well as policy regarding dividend pay-outs. For example, it is believed that stable institutions such as the banking sector mostly pay good dividends on their stocks. In addition, factors such as a sharp decline or increase in stock prices can also have an impact on the dividend yield of stocks. Let’s assume that ‘company A’, whose stock price closes the year at GH¢5 per share, declare a dividend of GH¢0.3 per share. The dividend yield, in this case, would be 6%. Now, if the stock price of ‘company A’ declines from the GH¢5 to GH¢2 the following year while it maintains the same dividend of GH¢0.3 per share, the company’s dividend yield would definitely shoot up to 15%.

Dividend yields can be of many benefits. In a post about the performance of stocks on the GSE, I made mention that capital gains (owing to price appreciation of stocks) alone do not constitute the total performance of stocks. In fact, dividend yield plays an important role when it comes to the overall profit or yield of a stock. For example, if the price of a stock goes up by 20% in a particular year and the company further pays a dividend reflecting a yield of 5% for the same year, the overall return of the stock would be 25%.

In a period of falling markets, dividend yield remains one main consolation to investors. Using 2015 and 2016 as typical examples when the Ghana Stock Exchange made losses of -11.77% and -15.33% respectively, an investor who benefited from an average dividend yield of 4% could be better off than one who gained none or less dividend yield. Good dividend yields can be particularly useful for investors who seek to grow their investment and at the same time receive some regular income. It must however be stressed here that the payment of high dividends by companies may also come at a cost as it can deny the companies of potential reinvestments.



Historical dividend yields of listed companies

Even though historical data does not guarantee future prospects, one may still be able to guess the future dividend of a company based on the historical trend of the company’s dividend yield. This is even more useful for investors who seek high dividend income. In the table below, you will find the historical dividend yield of listed companies of the Ghana Stock Exchange.

Historical dividend yield of stocks on GSE
Company
Trading symbol
Dividend yield, %
Average, %
2009 2010 2011 2012 2013 2014 2015 2016
1 AngloGold Ashanti Limited Depository shares AADS 0.81 1.00 2.51 0.00 0.00 0.00 0.72
2 Access Bank Ghana ABG *NA NA NA NA NA NA NA NA NA
3 African Champion Industries Limited ACI 0.0 0.0 0.0 0.00 0.00 0.00 0.00 0.00 0.00
4 Agricultural Development Bank ADB NA NA NA NA NA NA NA NA NA
5 AngloGold Ashanti Limited AGA 21.9 0.38 0.51 1.22 0.00 0.00 0.00 0.00 3.00
6 Aluworks Limited ALW 9.1 0.0 0.0 0.00 0.00 0.00 0.00 0.00 1.14
7 Ayrton Drugs Manufacturing Co. Ltd. AYRTN 0.8 1.31 0.0 0.69 0.00 0.00 0.00 0.00 0.35
8 Benso Oil Palm Plantation Limited BOPP 3.3 4.43 4.88 4.93 2.41 0.81 2.82 1.90 3.19
9 CAL Bank Limited CAL 7.3 1.6 4.64 6.84 3.57 5.25 5.3 9.7 5.53
10 Clydestone (Ghana) Limited CLYD 3.8 0.0 0.0 0.00 0.00 0.00 0.00 0.00 0.48
11 Camelot Ghana Limited CMLT 2.8 0.0 12.5 0.00 0.00 5 0.00 6.25 3.32
12 Cocoa Processing Company Limited CPC 1.3 0.0 0.0 0.00 0.00 0.00 0.00 0.00 0.16
13 Ecobank Ghana Limited EGH 5.7 0.0 6.27 8 5.18 5.66 11.27 12 6.76
14 Enterprise Group Limited EGL 0.7 5 1.58 3.33 0.00 1.43 1.04 2.1 1.90
15 Ecobank Transnational Incorporated ETI 21.3 2.82 0.0 2.25 0.00 0.00 0.00 2.8 3.65
16 Fan Milk Limited FML 1.0 4.08 0.84 1.13 0.00 1.71 0.00 1.4 1.27
17 GCB Bank Limited GCB 6.9 1.32 3.78 3.33 2.94 3.96 8.44 8.7 4.92
18 Guinness Ghana Breweries Limited GGBL 2.9 2.49 0.0 0.00 0.00 0.00 0.00 0.00 0.67
19 NewGold Issuer Limited GLD NA NA NA NA NA
20 Ghana Oil Company Limited GOIL 5.2 3.59 0.0 2.26 1.61 1.52 0.00 1.8 2.00
21 Golden Star Resources Limited GSR 0.0 0.0 0.0 0.00 0.00 0.00 0.00 0.00 0.00
22 Golden Web Limited GWEB 0.0 0.0 0.0 0.00 0.00 0.00 0.00 0.00 0.00
23 HFC Bank (Ghana) Limited HFC 1.6 3.41 3.56 4.89 0.00 2.33 6.67 7.06 3.69
24 Mega African Capital Limited MAC NA NA NA NA NA 0.00 0.83 1 0.61
25 Mechanical Lloyd Company Limited MLC 3.0 0.0 5.45 4 0.00 3.57 5.26 5.3 3.32
26 Produce Buying Company Limited PBC 0.8 3.52 4.89 5.18 7.33 8.8 12.57 6.16
27 Pioneer Kitchenware Limited PKL 0.0 0.0 0.0 0.00 0.00 0.00 0.00 0.00 0.00
28 PZ Cussons Ghana Limited PZC 1.59 2.09 2.83 7.53 6.65 0.30 3.50
29 Standard Chartered Bank (GH) Ltd. SCB 5.0 2.79 26.52 3.14 5.65 0.00 2.3 6.49
30 Standard Chartered Bank (GH) Ltd. (Prefrence shares) SCB PREF 10.00
31 SIC Insurance Company Limited SIC 5.9 4.43 5.21 0.00 0.00 0.00 0.00 2.22
32 Societe Generale Ghana Limited SOGEGH 10.0 7.45 8.33 5.33 6 Bonus shares 9.5 7.77
33 Starwin Products Limited SPL 2.0 0.0 28 0.00 0.00 0.00 0.00 4.29
34 Sam Woode Limited SWL 16.7 0.0 0 0.00 10 0.00 30.00 8.10
35 Trust Bank (Gambia) Limited TBL 2.6 0.0 4.29 0.00 0.91 5.88 9.6 3.33
36 Tullow Oil Plc TLW NA NA 0.0 0.39 0.00 0.00 0.46 0.46 0.22
37 Total Petroleum Ghana Limited TOTAL 3.5 3.4 2.81 13.72 1.61 2.3 4.56
38 Transol Solutions Ghana Limited TRANSOL 0.0 0.0 0.00 0.00 0.00 0.00 0.00 0.00
39 Unilever Ghana Limited UNIL 3.6 4.32 5.63 1.40 2.39 3.01 2.3 3.24
40 UT Bank Ghana Limited UTB 0.15 0.12 4.55 8 0.00 0.00 2.14

*NA: Not available, mainly due to company not listed by then.

Credit: GSE

 Dividend yield of stocks: Brief observations

From the above data, dividend yields of the financial sector appear to be higher than that of the other sectors. A few banks having a good average dividend yields for the period under study are CAL bank (5.53%), Ecobank Ghana (6.76%), GCB bank (4.92%), Standard Chartered Bank (4.49%) and Societe Generale Ghana Limited (7.77%). As earlier stated, the industrial sector of a company can have an influence on its dividend yield.

Even though dividend yields of the manufacturing sector are not that encouraging, there are a few exceptions. For instance, the average dividend yield of Benso Oil Palm Plantation Ltd., PZ Cussons, and Unilever Ghana Ltd. are 3.19%, 3.5% and 3.24% respectively. These are comparatively better than some of their counterparts in the manufacturing sector.

The average dividend yields of some companies, although good, are not evenly distributed over the years. One of such companies is AGA whose average dividend of 3% is mainly contributed by its 2009 dividend yield of 21.9%. ETI’s average dividend yield of 3.65% is similarly contributed by its 2009 dividend yield of 21.3%. Unfortunately, there are companies that have paid no dividend for such a long time (since 2009). Examples include African Champion Industries Limited, Golden Star Resources Limited, Golden Web Limited, Pioneer Kitchenware Limited, and Transol Solutions Ghana Limited.



Could February be good month to buy stocks on GSE?

February _ex-dividend date

Very recently, I posted about dividend payments of some selected companies on the Ghana Stock Exchange. One thing peculiar about dividend declaration is ‘ex-dividend date’. Whenever board of directors declares dividends, they also announce an ex-dividend date in order to determine rightful owners of dividends for stocks purchased afterwards. To qualify for a declared dividend, investors must buy stocks, at least, one business day before the ex-dividend date. For example, when SOGEGH (Societe Generale Ghana Ltd.) declared dividends last year, it further announced ‘23rd March, 2016’ as the ex-dividend date. What this implies is that any investor who purchased SOGEGH shares before 23rd March, 2016 was entitled to the declared dividend. On the other hand, any seller of SOGEGH shares traded after the said date was entitled to the declared dividend.

Now, before you ask the question ‘what has ex-dividend date got to do with buying stocks in February?’ consider visualising the purchase of a cow that is due to deliver a calf. All things being equal, you (as the buyer of the cow) stand to benefit from the additional calf in the immediate term.

Back to the dividend subject, February is known to be the month when many traded companies begin to declare their final dividends for the preceding financial year. Even though some institutions publish their dividends later in the year, many declarations often start in the latter days of February through the months of March and April. Examples of trading companies that had previously declared their dividends in the said period can be found below:

  1. CAL Bank Ltd.
  • Dividend for the 2009 financial year was published on 2nd March 2010
  • Dividend for the 2010 financial year was published on 28th February 2011
  • Dividend for the 2013 financial year was published on 21st February 2014
  • Dividend for the 2015 financial year was published on 29th February 2016
  1. SOGEGH
  • Dividend for the 2009 financial year was published on 23rd February 2010
  • Dividend for the 2010 financial year was published on 3rd March 2011
  • Dividend for the 2011 financial year was published on 8th March 2012
  • Dividend for the 2013 financial year was published on 5th March 2014
  • Dividend for the 2015 financial year was published on 3rd March 2016
  1. GCB Bank
  • Dividend for the 2012 financial year was published on 30th April 2013
  • Dividend for the 2013 financial year was published on 30th April 2014
  • Dividend for the 2014 financial year was published on 31st March 2015
  • Dividend for the 2015 financial year was published on 19th April 2016
  1. Fan Milk Ltd.
  • Dividend for the 2008 financial year was published on 16th March 2009
  • Dividend for the 2009 financial year was published on 17th March 2010
  • Dividend for the 2010 financial year was published on 6th April 2011
  1. HFC Bank
  • Dividend for the 2008 financial year was published on 26th March 2009
  • Dividend for the 2009 financial year was published on 11th March 2010
  • Dividend for the 2014 financial year was published on 31st March 2015

Imagine buying some of these mentioned stocks and getting entitled to their declared dividends (if purchased before the ex-dividend dates). As mentioned earlier, it’s like purchasing a cow that is due to deliver a calf or purchasing a chicken that is due to lay eggs. In this instance, the calf or the eggs correspond to the dividends due to be paid.

february_pregnant stock

Getting paid dividends for stocks held for just a couple of months is a great deal. I mentioned in my previous post that dividend yields of stocks usually range from 4-9%. Let’s assume that you purchase CAL Bank’s stock whose historical dividend yield swings around 6%. If you hold these stocks for 3 months and get paid the dividend, your benefit would outweigh fellow shareholders who might have held their stocks for 1 year (12 months) but getting paid the same dividend yield. In fact, the 6% dividend yield (of stocks held for 3 months) extrapolates to about 24% per annum. [That is, (12/3) × 6 = 24%]

Don’t forget that some well-informed investors hold on to their stocks anytime dividends are declared even if they had earlier intended to sell them. They do so, in particular, if the dividend yields are good. Their motive is to postpone any sale of stocks until the ex-dividend date in order to gain from the dividend payments. Hence, before you wait for listed companies to begin publishing their dividends, why don’t you take advantage of it now? As you know, buying stocks on the GSE may also take processing time.



Dividend payments of selected stocks on the Ghana Stock Exchange

dividend payments

Honestly, there is one particular sentence I always love to come across in the annual reports of listed companies. It goes like:

The directors have recommended a dividend of GH¢… for the year ended…

As some of you may be already aware, a number of listed companies distribute portions of their earned profits to their shareholders on a regular basis. This payment, referred to as dividend, is one of the benefits of investing in stocks. Although dividend payments are often made in cash, they may also be distributed in the form of bonus shares (free additional shares to existing shareholders) or a combination of both. For instance, a company may issue bonus shares in the ratio of 1 share per 10 existing shares held by its shareholders.

Many listed companies pay dividends to their shareholders once annually. A few of them however pay dividends twice per annum, which are made up of interim and final dividends. TOTAL Petroleum, Tullow Oil and Mechanical Lloyd are examples of the few ones that usually pay dividends twice in a year. It should however be noted that even though some companies pay dividends twice in a year, the sum of their two dividend figures might not match the single dividends paid by other companies.

While some institutions prefer to issue cheques as payment medium of their dividends, others deposit them directly into shareholders’ bank accounts. CAL bank, UT bank and Tullow Oil are typical examples of companies that deposit dividends directly into their shareholders’ bank accounts.

It may also not be appropriate to compare the dividend figures of two different stocks, particularly if they are of different industrial sectors. A more appropriate way to determine which stocks pay more as dividend could be the use of dividend yields. Dividend yield is the dividend expressed as a percentage of the stock price. This normally ranges from 4% to 9% depending on the company’s dividend policy and other factors such as a sharp decline in stock prices.

Simply, Dividend yield = Dividend per share/price per share.

Although dividend payments remain one of the factors looked for by some investors during stocks purchase, they should not necessarily be the yardstick to determine whether a stock is good or bad. This is because even though a company may make massive profits, it may choose to invest most of the profits in expansion projects instead of giving them to its shareholders as dividends. Nonetheless, dividends can still serve a useful purpose for investors who seek regular income.

Infact, dividend payments as well as an increase in dividend payment rates cannot be guaranteed. For example, Enterprise Group Limited, which is known for consistently paying dividends to its shareholders, skipped issuing dividend for its 2011 financial year. Likewise, GGBL (Guinness Ghana Breweries Limited) paid no dividend to its shareholders from 2010 to 2012. Moreover, Camelot Ghana Limited paid a constant dividend of GH¢ 0.005 for four consecutive financial years (2008 to 2011) without increasing the rate.

On the other hand, Goil (Ghana Oil Company Limited), which listed on the GSE in November 2007, has consistently paid dividends to its shareholders in an increasing rate to date.

Without bombarding you with further dividend theory, let me tabulate below, the dividend payments of 10 selected stocks for the past decade.

See also: A snapshot of Ghana Stock Exchange performance in 2016



1. Dividend payments of CAL Bank Limited (CAL)

Financial Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Dividend, GH¢ 0.0075 0.0075 0.0075 0.0105 0.0145 0.012 0.013 0.026 0.035 0.053 0.081 0.1

2. Dividend payments of Guinness Ghana Breweries Limited (GGBL)

Financial Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Dividend, GH¢ 0.03 0.0361 0.0418 0.0429 0.0485 0.04 Nil Nil Nil 0.01729 Nil Nil

3. Dividend payments of Ghana Commercial Bank (GCB)

Financial Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Dividend, GH¢ 0.0375 0.04 0.055 0.055 0.060 0.06 0.07 0.14 0.18 0.25 0.32 0.33

4. Dividend payments of Ecobank Ghana Limited (EGH)

Financial Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Dividend, GH¢ 0.067 0.24 0.16 0.18 0.2 0.24 0.29 0.43 0.78 0.84

5. Dividend payments of Societe Generale Ghana Limited (SOGEGH)

Financial Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Dividend, GH¢ 0.045 0.045 0.03 Issued bonus shares 0.04 0.035 0.04 0.04 0.06 Issued bonus shares 0.076

6. Dividend payments of Enterprise Group Limited (EGL)

Financial Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Dividend, GH¢ 0.005 0.005 0.008 0.009 0.01 Nil 0.032 0.045 0.215 0.05

7. Dividend payments of Fan Milk Limited (FML)

Financial Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Dividend, GH¢ 0.03 0.04 0.046 0.0575 0.075 0.1 0.02 0.04 0.06 0.09 0.09 0.1035

8. Dividend payments of HFC Bank (Ghana) Limited (HFC)

Financial Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Dividend, GH¢ 0.0045 0.0055 0.01 0.01 0.015 0.016 0.022 0.028 0.035 0.06 Nil

9. Dividend payments of Ghana Oil Company Limited (GOIL)

Financial Year 2008 2009 2010 2011 2012 2013 2014 2015
Dividend, GH¢ 0.0085 0.0104 0.012 0.014 0.015 0.016 0.02 0.025

10. Dividend payments of Camelot Ghana Limited (CMLT)

Financial Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Dividend, GH¢ 0.003 0.004 0.004 0.004 0.0045 0.005 0.005 0.005 0.005 0.006 0.006 0.0075 0.0075