How Re-Investing Your Dividend Will Multiply Your Wealth Faster

How to Build Wealth in the Stock Market (in your 20s and 30s) – The Secret to Plan, Retire and Double Your Stock Market Portfolio Faster.

When it comes to building wealth in the stock market, dividend investing is the least loved of the strategies practised. This is not far from the fact that the reward is small compared to the attractive and quick gain on share price appreciations which can come in days, weeks or months. Well, that is about to change as this guide will not only teach you strategies to picking dividend stocks and earn above CBN T-Bill rates but also strengthen and help you understand key secrets to generate a regular passive six-figure dividend income in a bearish and bullish market.

Continue reading How Re-Investing Your Dividend Will Multiply Your Wealth Faster

This is Why Zenith Bank Made More Profit in 2018

Zenith bank had just released its full-year result for 2018 with profit after tax coming out better than the previous year’s figure (2017).

The bank also increased its final earnings (PAT) by 11% to N193b, from N173b while gross earnings fell by 15% to N630b, from N745b.

While this isn’t a bad result, I believe a deeper look at specific figures will help us know where the bank is and possibly, future direction.

Let us look at some of the key figures and performance metrics:

  • Interest and similar income fell from N474b to N440b,  7.1% drop. No thanks to a drop in interest on loan and advances to customers

Continue reading This is Why Zenith Bank Made More Profit in 2018

This is How You Should Invest Your Money

Best Investment Opportunities In Nigeria for Long and Short Term. High Yield Financial Investments With Monthly, Quarterly, & Annual Returns on Your Money 2018, 2019 – Forex, Dividend Stocks, Treasury Bills, FGN Bonds.

Selecting the right investment options for your idle cash isn’t an easy one; a lot of factors should be considered especially now that the investment world is full of uncertainties.

See – How to Invest in Nigerian Banks

In this investing guide, you will learn how to pick the best investment opportunities for the long or short-term horizon based on your preference and personal appetite for risk:

Key Investing Questions to Ask:

When looking for an investment opportunity, you need to ask yourself these questions:

  • Is this investible cash a percentage of my total cash balance or everything; “home and abroad”? Assuming you have N10 million in your life savings account and are looking for long or short term investment opportunities in Nigeria, the way you would invest N1 million, which is 10% of your N10 million cash balance, will definitely be different from your mindset if the whole N10 million is to be invested. A smart investor would rather take on lower risk opportunities on N10 million investment and higher risk on N1million.
    • So, when you are looking for a place to invest in, consider the percentage of what you are investing to your life savings; lower risk for 30 – 100% and higher risk on 20% or less.
  • How old am I? As dumb as this question sounds, it is also critical to determining where to invest your cash. You would be sharing a disastrous advice if you encourage a 60-year old man to go invest 70% of his life savings in the stock market. What happens when the market crashes? that is a short route to high blood pressure.
    • So, check your age range for better portfolio rebalancing; ages between 20 – 40 can invest actively in the stock market but as you grew older to 50, fixed income securities make more sense; what you need is an opportunity that generates monthly quarterly, semi-annual or annual cash flow return.
  • What level of risk am I willing to take? Every investment comes with a risk. The risk is the possibilities that your actual return may vary from the expected outcome; it could be higher or lower. In the investment world, lower risk opportunities tend to offer a lower return while high-risk opportunities usually offer an above-average return on your investment.

If you can provide honest answers to the following questions, you will find it easier to know which investment option is right for you.

Let me share some of the best investment opportunities in Nigeria based on the questions asked earlier:

  • For someone who is willing to invest 20% of his life savings, still below 40 years and wants to get ideas for short or long-term horizon, here are my tips:
    • For short term; buy growth stocks in a sound company, trade forex or commodities market, invest in growth mutual funds or start an online business.
    • For long-term:  buy dividend stocks, and, FGN bond and fixed income mutual funds.
  • For someone who is willing to invest his life savings and above 50 years:
    • For short term: buy Treasury bills, invest in 90-days fixed deposit, and invest in fixed income money market.
    • For long-term: buy FGN bond, invest in fixed income mutual funds, buy dividend stocks in a blue chip company and insurance annuities.

This is how you should consider and screen different options before deciding whether you want to go ahead.

As a beginner or a novice who doesn’t understand some of these investment ideas, let me share a brief information about them:

Dividend Stocks:

These are stocks that pay parts of our profit to shareholders; the cash payout is referred to as a dividend. Dividend stocks are great for investors looking for cash flow and as more buyers accumulate the shares of the company, prices tend to rise. Some of the best companies that pay dividends in the Nigeria stock market are Nestle, Unilever, Zenith Bank, GTBank, UBA, etc.

See – My Checklist for picking good dividend income stocks

Treasury Bills

Treasury Bill, also known as T-bills are short-term fixed income debt instruments issued by the CBN at a regular auction. T-Bills could be 30-days, 90-days, 180-days or 364-days with varying interest rates. The higher the maturity period, the higher your return.

When you buy T-Bills through your bank. depending on the type, an interest is paid upfront and credited to your account with the principal repaid on the expiration of the investment.

For instance, If you invest N1,000,000 in a 364-day T-Bills which, as of this writing, offers 14.95% interest, N850, 500 will be deducted from your initial investment leaving you with an upfront interest of N149,500. At the end of the 364 days period, your principal (N1,000,000) will be credited back into your account.

For lower T-Bills duration like 90-days, the calculation isn’t direct as you think; let us assume you opted for a 90-day T-Bills offer of 10.2%, your upfront interest isn’t N102,000 but N25,000.

Here is how to arrive at your interest payment: 90/360 (prorate the 90 days in a year ) x 0.102 (interest percentage) x N1,000,000 invested.

FGN Bond

Every year, the federal government (FGN) drafts its annual budget which contains a forecasted expenditure and expected revenue. As a way to generate more revenue for capital and recurrent expenditures, the FGN had always explored debt market if the cash flow from oil and taxes aren’t enough. One of the debt instrument issued by the government to raise more money for long-term capital projects is “Bond”.

A bond is a long-term debt instrument issued by the government to raise money for long-term projects; we have infrastructural bonds, SUKUK bond, green bonds, and savings bond. At the state level, some state governments issue state bond to finance state projects.

FGN bond pays interest semi-annually; every six months to bond holders directly to their account up till the maturity period after which the principal is paid back.

Mutual Funds

Mutual funds are a collective investment scheme that pools resources together for a common purpose. The funds could be invested in Treasury bills, bonds, the stock market or a mix of all these opportunities. Since they are managed by regulated professionals, it is considered safe for investors with little or no knowledge of the market.

In Nigeria, you can select:

  • Equity Funds, if you have a high appetite for risk.
  • Fixed Income Fund, for T-Bills, Bonds and Commercial Papers.
  • Balance Fund, a combination of equity and fixed income opportunities.

See – Top Low-Risk Mutual Funds to Invest In

Insurance Annuities

Under annuity plan, you would be expected chose a plan and pay a fixed calculated premium on a monthly quarterly or annual basis for a specified period of years after which, the insurance company will pay you for life. This option is considered safe for all investors as its help one plan for the future. Some insurance companies like AIICO, Mansard, NEM, Custodian offers annuity insurance products.

While these are the best investment opportunities in Nigeria for short or long-term horizon, you are free to share more profitable emerging business opportunities that are not yet tapped.

My Favourite Dividend Stock In NSE Insurance Index

Best Insurance Dividend Stocks to Buy In Nigeria Stock Market – Learn How To Pick Penny Stocks In Insurance Sector, Spot Promising Shares That Will Pay More Dividend.

Spotting a good dividend income stocks isn’t about the yield alone as some beginners had thought. Sure, I know dividend is the focus here and as such “high-yield” is one key metric to watch, but there are a number of checklists to consider before investing your money in such companies.

Today, I decided to screen NSE listed companies for dividend income stocks so that I would add more passive income assets to my longterm equities portfolio. After 3-4 hours of stock analysis and deep research, I discovered my next favourite dividend income stock is surprisingly in a sector I least expected, guess what? It is Custodian Investment PLC, formerly Custodian and Allied Insurance Plc.

As of this writing, the stock is selling for N5.18 and had increased by 33.16% and 43% on a YTD and 1 year respectively.

Why did I pick this insurance stock as my favourite dividend income stock? Let’s use the 6 criteria I shared on this blog to screen Custodian Investment Plc.

Dividend Yield

I had earlier stressed the key reason your search for dividend should start with yield. While it shouldn’t be too high to avoid buying stocks that are in trouble, just like Skye Bank, a lower yield below an acceptable level might mean that you are not buying at a cheap price. Your definition of cheap stock as an income investor isn’t the price you pay on nominal terms but the value you are expected to get after investing in your selected stocks.

This is why you should only buy a stock that offers a juicy dividend yield. An acceptable yield is one that is close to the CBN treasury and FGN bond of 10-12%, and I already said that a dividend stock that offers 8-10% isn’t bad.

As of this writing, Custodian Investment Plc stock sells for N5.18, the stock, after hitting a new high of N6.89, had been trending downward as investors negative sentiments on the NSE market persist.

Based on the current market price and the last dividend payout of 42k, Custodian Investment offers a yield of 8.1%.

Consistency of Dividend Payment

A great dividend rewards its shareholders, even though we might see some downtimes in the trend but the consistency of dividend payment is one pension fund managers and other institutional investors watch out.

An acceptable number of years a company must have covered in its dividend history is 7-10 years with little or no record of holding back. Custodian and Investment plc meets this standard.

In the last 5 years spanning from 2013 to 2017, the company had paid 16k, 18k,  20k, 25k, and 42k respectively.

Average Annual Dividend Growth

Consistency in dividend payment may not translate to increasing reward for shareholders. The growth trend also matters; a company might be consistent in paying a dividend but at a moderate level that isn’t attractive. To avoid de-marketing some listed stocks, I won’t mention a name here but I have seen a banking stock with falling dividend year on year for 5 consecutive periods now. Such stock, we would say, is consistent but not growing.

Growth is the only metric that would make a dividend stock more attractive to fixed income investors who want to divest from CBN Treasury or FGN bond.

From the dividend history of Custodian Investment plc, the stock has an average dividend growth of 25% which is clearly above the 10% threshold and ranks among the best in the industry.

Based on rule 72, Custodian dividend yield for shareholders who key in at the current market price could double in 3 years to 16.2%.

Dividend Payout

The biggest driver of dividend-paying stocks is the profit they make from ordinary business and increased profit comes from re-investment. Companies that don’t invest in growth might hit a roadblock and as such generate less distributable cash. This is the reason, I love stocks that pay less and re-invest more in future growth and expansion.

Custodian Investment has a historical average dividend payout of 29.25% which is less than my 40% threshold and still within an acceptable minimum level to entice shareholders who want to balance growth and cash reward.

Return on Equity Vs Debt

Custodian Investment plc has a 5-year average return on equity of 18.3% which is quite impressive. On a breakdown, the return on equity grew from 18% in 2014 to 20% in 2017 while Debt to Equity has been relatively stable at 1.2 in the last 5 years. The insurance firm has been utilizing shareholders’ fund to efficiently.

We understand that this is an insurance stock, policy liabilities is a key part of the business. This is tantamount to deposit liabilities in the banking sector.

Custodian Investment passed!

Average Free Cash Flow Growth

In as much as the dividend is driven by profit, it is paid from actual cash flow. This is the reason, you must always look at the trend of cash generated from the operation, it is only a company that has enough cash in the bank, that pays a dividend.

At the “cash generated from operation” section of the statement of cash flow as culled from investing.com, Custodian Investment plc reported a cash of N2.7b, N8.4bn, N6.8bn and N4.1bn from 2014 to 2017, invested N301m, N224m, N326m, and N439m on capital projects in the same period which leaves us with a free cash flow of N2.3, N8.17b, N6.47, and N3.66 respectively. This represents a 5-year average cash growth of 19%.

The company has enough cash to sustain dividend payment.

The trend of cash flow indicative of the fact that the company is investing in future growth, no wonder the management opted for the change of name, from Custodian and Allied Insurance to Custodian Investment Plc to reflect the next phase of growth.

In summary, Custodian Investment passed my 6 checklists! It’s a buy for longterm from my end.

My 6 Checklists for Picking Great Dividend Income Stocks

Best Dividend Paying Stocks To Buy In Nigeria Stock Market – Learn How To Buy Shares In Companies That Pay High Dividend Yield Every Year.

A lot of investors overlook the power of dividend. In fact, since 1990, dividend has generated half of the stock market investing profits in the stock market. Further, dividend stocks offer investors consistent income and are often a hedge against share price fall.

Benchmark

Not every company that pays dividend actually qualifies as a good dividend income stock, so it’s better for an investor to know when he is better off investing in “Treasury Bills, FGN Bonds,” or keeping their cash in “Fixed Deposit”

As of this writing, CBN Treasury bills pay between 11-12% per annum while 5-10 year FGB bonds hover around 15%.

With such juicy and risk-free return on your investment payable semi-annually, why then should one consider a dividend stock?

The reason isn’t unconnected to the fact that returns from Treasury bills and FGB bonds are subject to interest rate risk, and as inflation inches upward, your return doesn’t increase; it is fixed throughout the tenor and might even reduce in value as real return turns negative. Negative real return arises when the inflation rate increases faster than your return on investment.

This is the reason, smarter investors don’t buy a stock because it pays dividend consistently but that the return as measured by dividend yield is close to the average yield on Treasury or FGB Bonds and likely double in 5 years or less. A dividend yield is calculated by dividing the dividend per share by share price. It is a measure of the percentage of cash paid to shareholders based on the amount invested.

Let’s take UBA as a perfect example of how dividend income stock can generate an above-average return on your investment if you had bought the stock for N4 in 2014 when it paid 10k per share.

The yield as of then was 2.5% while 10-year FGN bond in the period was 11.89% to 12.09%. (Source: Proshare)

FGN bond as that period paid more and seems attractive compared to UBA stock.

But now, equity investors in UBA now enjoy a better return of 21.25% today and sells for N8 per share (85k per share dividend divided by N4 paid on purchase in 2014), an impressive long-term return that beats the same FGB bond of 12%.

The big question, how can one scoop up dividend stocks that also have an upside potential? Yes! I mentioned share appreciation because, a company that rewards its shareholders year on year will, no doubt, attract more investors who place a premium on the value and as such, see its share price increases on accumulation.

Here are my 6 checklists to spot great dividend stock in the NSE market.

Dividend Yield

The dividend yield lets you measure the return expected when you buy at the current market price. It’s best benchmarked with CBN Treasury and FGB Bonds and should not be far less or more.

As of this writing, the FGN bond is 12%, so a modest dividend yield of 8-10% makes more sense. A dividend yield above 15% calls for further scrutiny as such tempting level could be a result of a massive sell-off since lower prices translate to higher yield, an investor should stick to a moderate yield of 8-10%.

Consistency of Dividend Payment.

Your preferred stock should be a dividend aristocrat; a stock that had been paying dividend consistently for 7-10 years. Dividend aristocrat is known for their consistency in dividend payment and such tends to be a safe haven for investors looking for retirement stocks.

Annual Dividend Per Share Growth of 10%.

This is a key metric to watch as it is the reason UBA stock yield, as shared earlier, jumped from 2.5% to 21.25% in 4-5 years. Based on the dividend history of the bank, it has an average annual growth of 15%. Using rule 72, a stock should have an average dividend growth rate of 14% to double its payout to shareholders in 5 years. For 20% growth rate, it will take 3-4 years.

When you have several dividend income stocks with high and low yields to choose from, use their average annual dividend per share growth to screen for the best. High yield doesn’t mean it is a great pick; you might end up having your cash payout reduced if it’s been stable or stagnant but a lower yield with above-average growth will reward you more in the future.

Dividend Payout.

The average payout shouldn’t be in excess to deter the company from re-investment. Smart investors know that growth comes from re-invested profit and as such should feel uncomfortable buying equities in a company that pays a higher portion of its profit back to shareholders except it’s a special dividend from income realized from one-off asset sale. The rule of thumb is to buy stock with dividend payout less than 40% of its earnings per share.

Return on Equity vs Debt to Equity.

A great dividend stock utilizes shareholders fund to generate more profit above industry average while reducing its interest expenses or lower exposure to high-interest debt. A higher cost of debt could affect profit after tax hence, reduce distributable and re-investible profits. The average return on equity of a good dividend stock in the last 7-10 years should be above 10% while debt to equity should be reducing or less than 1.

But, for businesses that generate deposit liabilities like Banks, focus on the cost of risks, capital adequacy ratio and Non-performing loan ratio.

On insurance stocks, focus on average claim ratio, expense ratio and combined ratio as a way to measure profitability.

Average Free Cash Flow Growth.

Dividend is paid from cash generated from operations, not from net profit. As a smart investor, you should focus on the free cash flow reported on the cash flow statement. To know what the free cash flow is, deduct capital expenditure from cash flow generated from operating activities.

Companies can manipulate their net earnings at the end of the year but cannot doctor their cash flow. Great dividend income stocks don’t just grow their net earnings but also generate enough cash to pay shareholders at the end of the year.

Based on these checklists, I will be sharing recommended dividend income stocks you can buy on this blog, do subscribe to get the latest updates or click here to join our WhatsApp Group on Stock Market

Why You Should Be a Longterm Investor In Zenith Bank

If you are looking for a banking stock to speculate on right now, Zenith bank isn’t one you should gamble on, rather key into the potential of the bank as a long-term investor.

As of this writing, Zenith Bank’s stock year to date return is -16.9% but the dividend yield of 12.3% is a return every smart stock market investor should quickly take advantage of right now.

The stock and UBA, are the only banking stocks with a double-digit yield above 10%.

While dividend yield only isn’t enough to ascertain the stability of a long-term dividend income stock, let’s look at the dividend history of Zenith bank.

Zenith, at a closing price of ₦21.5 and projected final dividend of ₦3, offers attractive dividend yield (13.9%) that clearly beats fixed deposit, treasury bills and long-term bonds.

Based on the dividend history of Zenith, ₦1.75 in 2014, ₦1.8 in 2015, ₦2.02 in 2016, ₦2.7 in 2017 and an interim cash pay out of ₦0.3k in 2018, it has an average annual dividend per share growth of 15%. In 5 years, shareholders of the bank may see their pay out jump from 13.9% to 27.9% (expected pay out of ₦6 in 2023 per share divided by the purchase price of ₦21.5)

In the last one month, the bank’s stock is up by 2.35% as investors looking for long-term stocks with attractive yield accumulates above average units of bank shares at an undervalued price.

Recent Result

Results for the half year ended June 2018 show that interest income fell by 12.8%, from ₦262 billion in 2017 to ₦228 billion in 2018 while interest expenses fell to ₦74billion (from ₦123billion) as the bank lowered its interest rate on fixed deposit to save cost. Overall, the bank’s customer deposit from ₦3.4 trillion to ₦3.1 trillion.

Profit before tax jumped from ₦92 billion in 2017 to ₦107.3 billion in 2018. Profit after tax rose marginally; from ₦75.3billion in 2017 to ₦81.7 billion in 2018.

The bank’s financial performance was largely boosted by the significant drop in impairment loss on financial assets to ₦9.7 billion (from ₦42.3 billion in previous comparable period). Thanks to the increasing oil price (above $65/barrerl) which is expected to lower oil and gas loan risk and boost asset quality.

The growing adoption of mobile banking is also expected to support non-interest income in the future.

Technical Analysis

Technically, Zenith bank stock price is below its 20-day price of ₦23 and 50-day moving average price of ₦26.3 which suggest that investors had been selling the stock due to general market sentiments.  But, as the stock found support at the same level with the stock’s 200-day-moving-average of ₦19.33, and as of this writing sells for ₦21.5, we believe long-term investors are now taking advantage of the attractive dividend yield opportunity since it’s a dividend income stock.

Valuation

Zenith bank reported a 2018 half year EPS of ₦2.60, which is 8% growth over the EPS of ₦2.4k in the comparable period (2017).

Using a discount rate of 14%, a modest declined full-year EPS (on the expected reduction in interest income due to lower yields on fixed income securities) of ₦5.2, we assign a fair value of ₦37 to the stock, which is 72% above the current share price.

Market update

S&P Global Ratings affirmed its ‘B’ long-term and ‘B’ short-term issuer credit ratings on Nigeria-based Zenith Bank PLC (Zenith). The outlook is stable. At the same time, the rating agency affirmed its national scale ratings on the bank at ‘ngA/ngA-1’.

The affirmation reflects the view that Zenith will continue to display better asset quality indicators than its domestic peers and sound revenue generation over the next 12-18 months despite the generally slow economic recovery in Nigeria. (source: Proshareng)

Recommendation

We assign a BUY rating on Zenith bank for long-term investors.

About Zenith Bank Plc

Zenith Bank PLC is a commercial bank with offices located in several parts of Nigeria. The Bank provides services to corporate, commercial and individual customers.

UBA Stock: The Dividend Income Stock With Little Risk

This dividend income section of my blog is focused on selected stocks that offer a double-digit dividend yield and have rewarded shareholders handsomely in the last 4 – 5 years and may still increase dividend per share in years to come.

Why you should add UBA to your dividend income portfolio now.

If you had bought UBA around ₦4 – ₦5 per share, your dividend income as a long-term investor would be a paltry 2.5% of your investment in the year of purchase. Did you also know that the same dividend income now pays some of the bank’s shareholders a whopping 21.25% today? A return that clearly beats Treasury Bill, Bond and Bank Fixed Deposit.

UBA is one of the banks that had, not only be paying dividend consistently but also grew per share payout from 10k in 2014, 60k in 2015, 75k to 2016 to 85k in 2017 and 20k per share in the first half of 2018.

This is how dividend investing makes one a millionaire which is the key reason I decided to add “dividend income stock recommendation” to this blog.  The idea is to look for dividend income stocks with yields in the double-digit range.

See – How I pick good dividend income stocks

Let’s review the recent performance of UBA:

As of this writing, UBA’s stock year to date return is -21.36%. The stock, from dividend income perspective and at a market price of ₦8.1, currently offers double-digit yield above 10% and is poised to double in 4 – 5 years if it maintains the annual dividend per share growth.

In the last one month, the bank’s stock is up by 1.25% as investors looking for long-term stocks with attractive yield pile up more units of bank shares at an undervalued price of ₦8.

Recent Result

Results for the half year ended June 2018 show that interest income grew from ₦154 billion in 2017 to ₦187 billion in 2018 while interest expenses increased to ₦76billion (from ₦53billion) as the bank looks to attract fixed deposit customers. Overall, the bank’s customer deposit increased from ₦2.7 trillion to ₦2.9 trillion.

Profit before tax jumped from ₦57.5billion in 2017 to ₦58 billion in 2018. Profit after tax rose marginally; from ₦42.3billion in 2017 to ₦43.7 billion in 2018. From the result, UBA showed improved performance despite the drop in yield on fixed income instruments, thanks to its Africa-focused strategy.

Technical Analysis

Technically, UBA stock price is below its 20-day price of ₦10.49 and 50-day moving average price of ₦9.5 which suggest that investors had been selling the stock due to general market sentiments. Long term investors might have renewed their buying interest as the price had just found a strong support at ₦7, the same level with its 200-day moving average of ₦6.3

Fundamentally, this isn’t unconnected to the attractive dividend yield opportunity since it’s a dividend income stock.

Valuation

UBA reported a 2018 half year EPS of ₦1.23, which is 1.6% growth over the EPS of ₦1.21k in the comparable period (2017). Using a discount rate of 14%, an assumed zero growth full year EPS of ₦2.2, we assign a fair value of ₦15 to the stock, which is 87% above the current share price.

Market update

No recent news.

Recommendation

We assign a BUY rating on UBA for long term investors.

About UBA

United Bank for Africa (UBA) Plc is a financial services group in sub-Saharan Africa with presence in Africa, the United Kingdom, the United States, and France. The Company is a financial institution offering a range of banking, pension fund custody and other financial services to customers in retail, commercial and and corporate segments of the African market.

How To Make Money In Stock Market Without Trading Stocks Yourself

How To Make Money From Nigerian Stock Exchange Without Trading Shares Yourself – Let Professional Mutual Funds Pick Top Performing Stocks, Invest for You While Your Get Returns.

After the 2008 global market crash that led to massive stock sell-off, sending the NSE index to an all-time low, interest in the Nigerian stock exchange market seems to be gathering momentum again. The equities market posted one of the best impressive performance of 42% in 2017; thanks to the reversed bullish trend in the oil market and innovative investors’ and exporters’ window introduced by the CBN to help make forex available at a market-determined rate without intervention.

This return which was far better than -16.1%, -17.4% and -6.2% in 2014, 2015 and 2016 respectively, was driven by Dangote Sugar Refinery (227%), International Breweries (195%), and Fidelity bank (193%). Other notable stocks that contributed to this positive close were Fidson, Stanbic IBTC, First Bank, UBA, NASCON and Nestle.

Since this news broke out early this year, I have been receiving several emails from my blog visitors and messages from retail traders on the best stocks to buy.  The interesting discoveries in these messages emails were that these senders weren’t experienced in stock market trading; no prior knowledge of the stock market investment or technical analysis of stocks, yet, they just wanted a simple and low-risk guide to taking their share of the potential wealth-creating opportunities in the stock market.

This is not even a local trend, foreign investors have are also keying into the trend.

Investors’ participation, at both local and foreign level, in the NSE market is now higher than it was last year.  While foreign portfolio investment is up by 59% to N132bn (against N82bn in February 2017), local investors have expanded their money flows by 51.48% to N140bn (against N128bn) (Source).

This actually shows that local investors invested more money than foreign investors.

How To Make Money From Nigerian Stock Exchange

This is a summary of the transaction flows from foreign and local investors. You will notice the spike from N83.22bn to N132bn; a lot of hot money is currently flowing to the financial market right now. Besides, as of 2018 YTD, local investors currently hold 56.56% of the market transaction while 43.44% is from foreign investors.

What did you see from this analysis? interest in the local stock market is at all-time high right now but what percentage of this traders are experienced and professionals traders? I can confidently say that only a few are actually making the real money.

As a smart beginner who isn’t a genius in the stock market but would like to invest in stocks, here is what you should do: instead of using trial and errors to pick stocks and lose money, isn’t it smarter to look for professionals that have a track record of positive returns in the stock market.

A brief look at mutual funds and their performance:

Mutual funds are professionally managed investment funds that pool money from investors to buy securities. While some funds are sector-focused, others are diversified. Your focus here is to look at equity funds; mutual funds that invested in listed securities for medium to long-term capital appreciation.

In Nigeria, we have a lot of professionally managed mutual funds that are creating more wealth for their retail clients. Why not find one,  let them manage your money for you while you focus on other businesses?

Let’s take a look at some mutual funds and their performance in 2017:

How To Make Money From Nigerian Stock Exchange

In percentage terms, FCMB Legacy Equity Fund topped the list to post the best return of 52%, followed by ARM Aggressive Growth Fund (46%) and FBN Nigeria Smart Beta Equity Fund (45%). While the past performance isn’t a key determinant of the future trend, it still serves as a guide to selecting the fund to select.

Here is my guide, I love equity funds not only posted positive return (above inflation figure of 14%) but also beats the NSE  market index.

As of this writing, we had just concluded the first quarter of 2018, let’s look at the top mutual funds that are posting market-beating returns above NSE index of 7%:

  • Meristem Equity Mutual Fund – This fund, owned by Meristem securities, focus on high-quality equities securities for long-term capital gain. Meristem Equity Fund created more wealth by 41% in 2017 and as at the end of Q1, 2018, it is already up by 17%.
    • If you had invested N1m in January 2018, in 3 months, you would have added N170,000 ( which is far better than fixed deposits or treasury bill).
  • Stanbic IBTC Aggressive Fund – When I contacted Stanbic IBTC to know more about this fund, they said, it’s targeted at high-class investors who can invest a minimum of N20m. While 60% of the fund is invested in equities, 40% is in fixed income market. Stanbic IBTC Aggressive fund posted 41% return in 2017. So far, the fund is up by 12.58% in Q1, 2018
    • If you had invested N1m in January 2018, in 3 months, you would have added a gain of N125, 800 to your investment.
  • Frontier Fund – This fund’s primary objective is to build long-term wealth for its clients by investing in carefully selected equities and money market securities. The fund gained 22% in 2017 but has now moved up to the ladder to be among the top 3 in the first quarter, up by 10.55%.
    • If you had invested N1m, you should have added N105,500 to your mutual fund portfolio in 3 months.
  • UBA Equity Fund – This fund is suitable for investors with a long-term outlook. It uses an internally generated fact-sheet to pick stocks that will deliver a long-term capital gain. The fund grew her client’s wealth by 41% in 2017 and also already up by 10.45% in Q1, 2018.
    • If you had invested N1m, your investment, at the end of March 2018, would have increased by N104,500.

While these aren’t a mutual recommendation, I shared this investing guide to let you know that,  even if you don’t know how to pick stocks, there are still alternative wealth-creation opportunities you can explore in the Nigerian stock market.

So, when you think of how to make money from Nigerian stock exchange market without spending hours analysing stocks or reading financial statements, go find a professional equity mutual funds that have good track records.

How I Follow Latest Nigerian Stock Market News & Company Report

Latest Nigerian Stock Market News & Financial Report – Follow Recent Happenings in NSE Trading Market, Top Gainers & Losers and Quarterly Results of Stocks

Investing in the stock market is like a sowing a seed on a farmland, you need to consistently monitor your investment, track the growth and follow events that could affect your expected return. But, how do you cut through the noise, keep up with latest company/market updates? this is a question you can’t afford to ignore if you must protect your capital from possible loss arising from market sell-offs.

Successful stock market investors don’t just analyse and pick great growth stocks with upside potential but also have a system that lets them follow all the companies they have shares in to avoid being taken unawares. A few weeks ago, a good number investors sold their shares to take profit which dragged some of my profitable stocks to month-low, but because I follow these stocks and didn’t get any alert of fundamental news, I had to load more units as I felt reversal isn’t far again.

For instance, Investors in Japaul Oil are currently not happy as the price of the oil stock tanked to a lower level after it posted 2 weeks gain on the back of additional fund injection by Milost Global which eventually turned soar as the private equity firm battles with litigations in New York and authenticity of its business acquisition model. This, plus the negative shareholders’ fund on the company’s statement of financial position is a major factor the could affect investors’ perception about Japaul Oil Plc in short to medium term.

If you are a shareholder and have not been following this update on top business news websites, you may not know why Japaul share price is falling and such would think there is a hope of a reversal in short-term.

Continue reading How I Follow Latest Nigerian Stock Market News & Company Report

How I Pick Profitable & High Dividend Paying Stocks In NSE

Highest Dividend Paying Stocks In Nigeria – Profitable Strategies To Pick & Buy The Best Nigerian Stocks For LongTerm Investments

I hope you enjoyed the detailed analysis I shared on how to pick the best banking stocks for a better portfolio performance? As of now, that investment strategy is the longest article on my blog, so don’t read it as a poem but understand how I reviewed Zenith bank’s stocks with a modest estimated value that revealed a 15% upside potential from now till March 2018.

As a continuation to the discussion I had with my friends on bank’s stock, another good guy asked, do you plan to invest for just price appreciation, or how can one find the best dividend paying stocks in Nigeria stock market? Well, that was another interesting question because a lot of stock market traders don’t have a clear idea of the opportunities in the market, they just want to enjoy price appreciation, and miss out on the residual income from dividend payouts to shareholders. I know a friend who had invested a huge sum into five (5) stable sectors stocks last year and is already expecting his first five (5) figure income this year, besides his portfolio is up by 27% as more institutional investors position themselves ahead of the full year audited report, 2017.

This post focuses on how we jointly picked the best highest dividend paying stocks in Nigeria stock market using a simple method I will be sharing right now:

See – My 6 Checklist to Pick Dividend Stocks With Double-Digit Yielding  Above CBN-Treasury Bills

Check the overall economic indicator – let Oil price guide you.

Anytime I look for stocks to pick, the first step I don’t skip is to ascertain the general economic environment using global Oil price trend. This post on how to find the best sector stocks to invest in explains everything you need to know about the effect of oil price on the Nigerian economy and opportunities in different sectors.

In summary, I said that an uptick in the price of oil helps the government generate more petrodollars which reduce overall economic risk, so expect more fund to be channelled to key sectors like industrial sector as infrastructural projects are re-visited or more capital projects embarked upon, while reserve is also boosted to help cushion the effect of exchange rate.

Continue reading How I Pick Profitable & High Dividend Paying Stocks In NSE