Transcorp’s Tiny Dividend

Good morning and how are you doing? Welcome to this week’s edition of 4 Customs Street, our weekly newsletter on the stock market.

The newsletter is divided into two:?

• Green White Green—focused on the Nigerian stock market.?
• Star-Spangled Banner—focused on the US stock market

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Green White Green Last Week?

Last week, the All-Share index fell by 0.67%. The index measures the average performance of stocks. Some stocks did better than the index. Some stocks did worse than the index.

CAP Plc was the best-performing stock last week. It gained 10% closing at ?19.80. RT Briscoe led last week’s losers, declining by 17.50% to close at 66 kobo.?

Transcorp’s tiny dividend

Transcorp Plc is the parent company of a number of firms in the hospitality, power and oil and gas sectors.?

Late Friday, it released its audited results for the 2021 financial year. Revenue grew by 47.7% from ?75.7 billion in 2020 to ?111 billion in 2021. Profit after tax went up by 528% from ?3.7 billion in 2020 to ?23.8 billion in 2021.?

Expecting a bumper dividend? The firm has proposed a dividend of 2 kobo per share amounting to ?812.9 million. If you own millions or billions of shares, then you may have a sizable dividend.?

74.6% of the company’s shareholders own between 1,000 to 10,000 shares. In essence, they would get between ?20 to ?200. For Nigerian shareholders, dividends are a key reason for buying shares. This company could easily afford to pay a much higher dividend as it made earnings of 34 kobo.?

Another option would be a share buyback. It has 40 billion shares in issue. Reducing the number of shares would increase its earnings per share and in theory ultimately increase its share price. That would also return money to shareholders.?

The company sold shares to the public at ?7.50 during its Initial Public Offer (IPO) in 2007. As of Friday, it closed at ?1.10.

Green White Green This Week?

A couple of companies may release their audited FY 2021 numbers during the week, having held board meetings to that effect. They include Beta Glass, GSK Nigeria, Fidson Healthcare, May and Baker, Unilever Nigeria and BUA Cement.

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Star Spangled Banner Last Week?

Stocks did fairly well last week. How do we know this? Average performances of stocks are measured using an index. The three major indices all closed positively.?

The NASDAQ Composite index gained 2%, the S&P 500 gained 1.8% and the Dow gained 0.3%.

Footwear maker Nike dropped its 3rd quarter results (companies release results every quarter or every three months). It made $10.8 billion in revenue (up 5% from the same period last year) and $1.3 billion in profit after tax (down 4% from the same period last year).?

One of the reasons for the dip was soft sales in China which is a key market. Greater China sales fell by 5% partly due to Covid-19 lockdowns and supply challenges.?

The company, however, increased its dividend payout by 12% from 27.5 cents per share to 30.5 cents per share.?

Star-Spangled Banner This Week?

Some of the trending issues last week will spill over: Sky high oil prices, and the Russia vs Ukraine war.?

It is a fairly quiet week in terms of earnings. Key companies dropping earnings are chipmaker Micron, online pet product retailer Chewy, and pharmacy chain Walgreen Boots Alliance.?

If you are an electric car geek, keep an eye out for delivery reports from Tesla, Nio, Li Auto and XPeng.?

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