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.



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