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

How I Trade US Stock Ahead of Earnings Releases

How To Trade The News and Earning Releases In US Stock Market – Learn The Best Strategy To Buy Foreign Stocks At Low and Sell At Higher Price for Profit

As of this writing, we had just wrapped up the 3rd quarter and are at beginning the final quarter of the year.

Any moment from now, listed companies in the US equities market will be expected to release their 3rd quarter reports so that investing public can take decisions as whether to hold the stock or sell.

Earnings seasons are characterized by market noise and high volatility due to investors’ reactions to several companies reports and announcements. While some listed stocks’ prices will experience massive sell-off on disappointing results, other stocks, with the impressive report will attract positive sentiments.

The third and most confusing are stocks that would go in the opposite directions; what I mean is you will see earnings beat expectations, instead of prices to follow the same trend, it will nose-dive as profit-taking volume outweighs bidders. In such, scenario, you need to quickly understand that investors have already priced in earnings expectations before the actual releases.

In the midst of this market noise, how do you cut through the needle, capture trading opportunities ahead of other traders and exit with a sizeable profit?

Here is how I am trading Apple stocks ahead of earnings release:


Screen for Stocks With Positive or Negative Sentiments

The sentiment of a stock is the culmination of past financial results, expectations and company-specific news. It shapes investors’ emotion around the stock and overall lead to buy or sell decisions.

When investors’ sentiment is positive, the affected stock’s price tends to increase which may be a result of the last earnings report or potential growth opportunities.

Below is the chart of Apple, a stock that has been enjoying positive sentiments and had just hit $1trillion market capitalizations.

How To Trade The News and Earning Releases

Look At Past Earnings & Analysis Forecast

Apple is expected to report its next quarterly earnings on November 1, 2018, past earnings had shown positive surprises with 11 analysts’ forecasting EPS for the next quarter at $2.77 against the reported EPS( for the same quarter last year) of $2.07.

With such positive sentiments, Apple is expected to trade higher before the earnings date as investor’s take position ahead of November announcement.

Best Entry and Exit Strategy

The overall stock trend is bullish as indicated by my favourite moving averages which I have already explained on analysis of MasterCard stock.

The best strategy to trade Apple stocks is to enter and exit before the earnings date.  Why should one close one’s trade before the announcement? we still can’t rule out of the fact that the market could turn sideways if Apple’s earnings come out below expectations; to be on a safer side and lower my trade risk, I’d rather exit the market and take profit.

The trade idea is to take advantage of the positive sentiment driving the stock by waiting for a dip, on profit-taking, to the 50-day SMA support region, buy on the resumption of the uptrend and sell at a higher price per share.

On the chart shared earlier, notice how price had bounced off the 50-day SMA (the 3 big circled regions) thrice before moving up to a new level in the last 2 months.

This strategy to trading stocks ahead of earnings releases had been very profitable, at least, I made money on MasterCard, Visa Card and Amazon’s last earnings expectations using this method.

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.

How To Trade Netflix Stock Ahead Of Q3 Earnings

Netflix Stock – US Stocks Trading Analysis and Setups – Learn How I Trade US Stock Market Online From Nigeria via CFD Stock Brokers.

As of this writing, Netflix shares is currently selling for $367.67. On YTD, the stock up by 82.73% so far, a performance that is not unconnected to the media company’s market penetration strategy and increasing global acceptance outside the US.

In the most recent quarter, the company reported an EPS of $0.85 (27th, July 2018) which is $0.05 above analysts’ expectations hence a surprise of 6.25%. But, the stock witnessed a massive sell-off as Netflix’s declining subscribers base came out at 5 million against an estimated 6 million users, which resulted in a 26% drop in market capitalization.


What next as we look forward to the company’s quarterly report?

Netflix, Inc. is expected* to report earnings on 10/16/2018 after market close. The report will be for the fiscal Quarter ending Sep 2018. According to Zacks Investment Research, based on 14 analysts’ forecasts, the consensus EPS forecast for the quarter is $0.68. The reported EPS for the same quarter last year was $0.29.

As investors price in the possibility of a better than expected earnings spurred by a growing subscriber base outside the US and investment in premium contents. Netflix shares have regained strength from the low of $310 to its market price of $367, 18% appreciation.

A closer look at the stock price in the last 3 weeks of trading, $375 seems to be a very strong resistance (the red circle region marked with A) to breakthrough before it retests the pre-earnings stock price of $420.

netflix stock - us stocks trading

Using sentiment analysis, Netflix is clearly bullish on short-term with price sitting above its 50-day SMA of $352. Investors expectations are high (rumour) with the RSI at 55.  All these indicate a potential breakout, hence, I bought at $366 with a target profit of $400 and stop loss of $347.  Since the 50-SMA is now acting as a support, it’s wise to set my stop loss below the average so that we can ride the volatility which, on average, is $13.

Update:

I had to close my trade for a paltry 3% profit after investors shun the global stock market for the US-Bond.

Rapidly rising Treasury yields (now at a 7-year high of 3.23%) are rocking equity markets around the globe, with high price-to-earnings tech stocks leading the decline,” said Yasuo Sakuma, chief investment officer at Libra Investments.

Netflix has since then suffered a sell-off from its recent month high of $385 to $361, the current share price as of this analysis. Although, it is still above my targeted exit price but I had to close the position to cut possible loss from general market sell-off.

While the media giant is expected to release its next earnings, we will be watching sentiments on the stock for possible re-entry.

Would you like to analyse US stocks like this, trade from your home/office and earn 5 – 20% return per trade? Click here for more details about my practical video training course.

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.

Is CCNN Still a Good Buy or Sell Stock?

While the overall NSE index is down by 15% or more, CCNN stock has already doubled shareholders’ wealth this year. As of this writing, CCNN’s stock year to date and one-year returns are 137.89% and 170.7% respectively. The stock is currently the best performer so far and as the government plans to rebuild northeast and finance more infrastructural deficits in that region, CCNN is better positioned to deliver impressive results this year.

Month to Date, the stock is down 26.86% as it looks overvalued. The current share price is N22, down from N31.35, its 52-weeks high.

See – How I analysed and bought this stock at N16

Recent Result

Results for the half year ended June 2018 show that revenue grew from ₦8.5 billion in 2017 to ₦12 billion in 2018 while the cost of sales increased to ₦6.6billion (from ₦5.4billion). From the result, Sales increased by 41%. On each Naira sales, the company spent less as cost ratio declined from 63% to 55%.

Profit before tax jumped from ₦1.3billion in 2017 to ₦3.6 billion in 2018. Profit after tax followed suit; from ₦1billion in 2017 to ₦2.6 billion in 2018.

Gross profit margin improved from 35% in 2017 to 45% in 2018.

Debt to Equity, a measure of financial leverage, increased from 70.8% in 2017 to 77.6% in 2018 but the increase in interest coverage shows that the company is able to finance its interest expenses with profit from operations.

Technical Analysis

Technically, CCNN stock’s price is below its 20-day price of ₦30 and 50-day moving average price of ₦27 which suggest that investors are taking profit right now. A break below the 50-day average price may set the stock up for further fall which is a great opportunity for long term investors to key into the company as fundamentals remain intact.

The long term sentiment is clearly bullish as the price is well above the 200-day moving average of ₦20.56

Valuation

CCNN reported a 2018 half year EPS of ₦2.07, which is 152% more than the EPS of 82k in the comparable period (2017). Using a discount rate of 14%, an assumed zero growth and a TTM EPS of ₦3.82, we assign a fair value of ₦27 to the stock, which is 22% above the current share price.

Market update

No recent news.

Recommendation

We assign a BUY rating on CCNN stock.

About Cement Company of Northern Nigeria

Cement Co Northern Nigeria PLC is a cement manufacturing and marketing company.

A Closer Look at May & Baker Stock

As of this writing, May and Baker’s year to date and one year return are -4.35% and 13.85% respectively. The stock’s sell-off started in 2016 after it reported a loss after tax. May and Baker’s raw materials are imported, and as such availability of forex is a key driver to the company’s bottom line; higher exchange rates lead to increased cost of sales while a lower rate is favourable.

It paid a dividend of ₦0.20 to shareholders on June 6, 2018. The dividend yield on the payment date was 7.87%

Its current share price is ₦2.49 while 52-weeks high is ₦3.42

Recent Result

Results for the half year ended June 2018 show that revenue grew from ₦4.4 billion in 2017 to ₦4.6 billion in 2018 while the cost of sales improved to ₦3billion (from ₦3.1billion).

Profit before tax jumped from ₦139million in 2017 to ₦388.9 million in 2018. Profit after tax followed suit; from ₦94 million in 2017 to ₦264.4 million in 2018. From the result, Sales increased marginally by 4.5%. On each Naira sales, cost ratio declined from 70.7% to 65%.

Gross profit margin improved from 29% in 2017 to 34% in 2018.

Debt to Equity, a measure of financial leverage, improved from 1.43 in 2017 to 0.91 in 2018. Thanks to the significant jump in retained earnings.

Technical Analysis

The above-average increase in volume shares traded last week, September 3, 2018, to September 7, 2018 (from 114,000 to 1,138,000) was an indication of fresh buying interest on May and Baker stock.

Technically, May and Baker stock’s price is above its 20-day but below 50-day moving the average price of ₦2.68. A break above the 50-day average price may set the stock up for a fresh bullish run as the relative strength index, a measure of momentum, is already at 49.

Crosses above 50, from 30, means that investors are bullish on a stock while a fall below 50 indicates a sell-off.

The long-term sentiment is clearly bullish as the price is well above the 200-day moving average of ₦1.73

Valuation

May and Baker reported a 2018 half year EPS of 26.98k, compared to 9k in 2017, a 199% increase.  This is not just an impressive growth but already covers 71% of 2017 full year’s EPS of 38k.

Using a discount rate of 14%, an assumed zero growth and a TTM EPS of 50k, we assign a fair value of ₦3.57 to the stock, which is 43% above the current share price and in a close range with its 52-weeks high.

Market update

The company is seeking additional equity capital of ₦3billion via right issues to finance expansion to more Africa countries. An application to issue 980million ordinary shares at an offer price of ₦2.50 has been filed with the NSE.

Recommendation

We assign a BUY rating on May and Baker at the current price with a target price of ₦3.5.

About May and Baker Plc

May & Baker Nigeria Plc manufactures and distributes pharmaceutical products, such as vaccines, antibiotics, and sera. The Company also sells diagnostics, medical equipment and bottled water in Nigeria.

Analysis of Dangote Sugar Refiney’s Stock

Dangote Sugar Refinery Share Price – My Analysis of Stock Performance on the Nigerian Stock Exchange and Why Should Buy Now for Short-Term Gain.

As of this writing, Dangote Sugar year to date return is -21.5%, a not-so-impressive performance that is not unconnected to the company’s revenue shortfall.

It paid a dividend of ₦1.25 to shareholders on June 20, 2018. Dividend yield on the payment date was 6.58%.

Its current share price is ₦15.7

Recent Result

Results for the half year ended June 2018 show that revenue declined from ₦118.6 billion in 2017 to ₦84 billion in 2018 while the cost of sales improved to ₦60.7billion (from ₦91billion).

Profit before tax fell from ₦25.2 billion in 2017 to ₦19.9 billion in 2018. Profit after tax followed suit; from ₦17.1 billion in 2017 to ₦12.7 billion in 2018.

From the result, Sales fell significantly by 41% as the company is faced with increased competition from sugar importers and lower sugar prices per kg. On each Naira sales, cost ratio declined from 76.7% to 71%.

Gross profit margin improved from 22% in 2017 to 27.6% in 2018.

The payment of ₦18 billion to trade partners as part of the company’s strategy to reduce debt contributed to the improved Debt to Equity ratio, from 1.10 in 2017 to 0.87 in 2018.

dangote sugar share price

Technically, Dangote stock is trading at the lower price compared to its 20-day and 50-day moving average after which portends a bearish sentiment on a short term. The long-term sentiment is clearly bullish as the price is well above the 200-day moving average of ₦9.68

Valuation

Dangote Sugar reported a 2018 half year EPS of 1.07, compared to 1.43 in 2017, a 25% decline. Using a discount rate of 14%, an assumed zero growth and a TTM EPS of 2.8, we assign a fair value of ₦20 which is 27.3% above the current share price.

Market update

No recent update on Dangote Sugar Refinery Plc.

Recommendation

We assign a BUY rating on Dangote stock at the current price with a target price of ₦18-₦20.

About Dangote Sugar Refinery PLC

Dangote Sugar Refinery PLC produces, refines, packages, and sells granulated raw white sugar domestically and regionally in Africa. The Company also plans to increase international focus.

Why You Shouldn’t Sell but Buy More Units of NEM Insurance.

NEM Insurance Stock Price – Why You Shouldn’t Sell NEM Insurance at Current Price – Learn How We Analyse Cheap Growth Stocks to Buy in the Nigerian Stock Exchange.

If you had bought NEM stock a year ago, your investment in the insurance company should be up by more than 200% now. As of this writing, NEM insurance year to date return is 80.72%, an impressive performance that earned the stock one of the best performing equities in the Lagos bourse.

It paid a dividend of ₦0.10 to shareholders on June 20, 2018. The dividend yield on the payment date was 3.61%.

NEM Insurance stock price is ₦2.85.

Since the stock is up by more than 200%, why are investors not taking profit?

Recent Result

Results for the half year ended June 2018 show that net premium income increased from ₦4.3 billion in 2017 to ₦4.4 billion in 2018. Profit before tax jumped from ₦1.4 billion in 2017 to ₦1.7 billion in 2018. Profit after tax jumped from ₦1.2 billion in 2017 to ₦1.5 billion in 2018.

As an insurance stock, we will be using the claim/loss ratio, expense ratio and combined ratio to ascertain the profitability of NEM insurance.

The claim ratio measures the proportion of net premium that is paid out as a claim to policyholders. NEM insurance paid out ₦135m as claim the half-year period to June 2018 compared to ₦365m reported in 2017, which is 63% lower.

The claim/loss ratio is 2.2% compared to 8.4% in 2017. This is the lowest in the industry.

Other insurance companies and their claim ratio: Aiico (79%), Mansard (66%), Wapic (49%),  Mutual Benefit (36%), Cornerstone (61%), Lasaco (26%), Consolidated Hallmark (47%), Law Union and Rock (39%), Sovereign Trust (41%), Regency Insurance (27%), Royal Exchange (40%), Prestige (47%), Linkage (62%) and Niger (28%)

The company also reported an underwriting expense of ₦2.1b in 2018 compared to ₦1.8b. The expense ratio increased from 41% in 2017 to 47% in 2018.

The addition of these ratios indicates that NEM insurance combined ratio improved from 49.4% to 49.2% and is still below the 100% benchmark.

A combined ratio below 100% means that an insurance company is profitable; it generates more money than it’s paying out as claim and underwriting.

Technical Analysis of NEM Insurance:

Technically, NEM stock is trading at the same level as its 20-day moving average after touching a high of N3.4.

The stock’s current price is ₦2.85, 19% of its 52 weeks high. All the indicators point to a short-term sell-off which might be ending soon, as the price is currently at a key 20-day MA support.

Valuation

NEM reported a 2018 half year EPS of 0.28, compared to 0.23 in 2017, 21% upside. Using a discount rate of 14%, an assumed zero growth and a TTM EPS of 0.58, NEM insurance has a fair value of ₦4.14 which 45% above the current share price.

Market update

A private equity firm, Eaton limited, announced the purchase of 130 million shares of NEM insurance PLC at N4 per share, representing a 40.35% premium over the insurance company’s closing price of ₦2.85.

Recommendation

Generally, when the 20-day moving average is above the 50-day, and 50-day is above the 200-day MA, the stock is bullish on a short term and long term. We assign a __BUY__ rating on NEM stock

About NEM Insurance

NEM Insurance Plc (NEM) is engaged in general insurance business. The Company is engaged in the provision of non-life insurance services for both corporate and individual customers.

The Company operates through two segments: Nem Insurance (Nigeria) Plc, and Nem Insurance (Ghana) Ltd. The Company’s products and services include fire/extraneous perils policy, consequential loss policy, burglary or housebreaking policy, fidelity guarantee policy, public liability policy, money policy, goods in transit policy, group personal accident policy, motor insurance policy, marine policies, aviation policy, financial risk management policy, machinery breakdown policy and electronic equipment policy.

The Company provides oil and gas, and energy insurance in Nigeria with a focus on various areas, such as upstream risks, downstream risks, and power, solid mineral and other products, and it also provides risk management services.

This article was first published on Yochaa App, Nigeria’s leading stock market data and information application.

How to Analyse Stock Market Trend: a Lesson from my Profit on MasterCard Stock

How to Predict Nigerian Stock Market Trend & Analyse Movement – Learn Stock Market Analysis, Know When to Buy and Sell Easily for Maximum Profit

Have you been in a situation where you bought a stock because it made the list of top gainers and on the next day the price suddenly fell to an extent that you were stuck; couldn’t sell at a loss again but rather decided to turn it to a long-term investment, even after months, you still couldn’t recover the loss suffered earlier but watched your stock sank more? Then, this guide is for you.

Your mistake was that you didn’t analyse the trend of the stock before buying or taking a position. The trend of a stock doesn’t have anything to with daily price fluctuation or else, you will keep checking the stock market table or market prices every day. When I buy stock based on my pre-determined setup, I try to avoid market noise; whether it’s up today or down tomorrow, I have always cut the noise and focus on my overall profit target.

As of this writing, my MasterCard stock just hit the profit target. I bought the US stock on the 16th, July 2018 at $205.5 and after 7 days, the stock touched $209. Did the price rise without a fall? No, at times it might even fall to $203; my account would be in a loss position but I wasn’t moved because I understood how to analyse a stock’s trend. My hope was intact and I said to myself, “as long as you did your homework well, have a trading plan, there is no need to panic”. Now, look at the result, I ended up in the green region.


What gave you confidence in this stock, you may ask? My simple response is, I understand the overall market trend. A stock trend is a very important factor to consider before taking a position. You could be lucky to go in the direction of the trend and cash out but you know what? You just played a gamble and won! Yes! you did. You could have entered another trade and lose your trading capital. So, isn’t smarter to understand a stock’s trend before opening a position?

What is a trend?

In the stock market, we say, a trend is a direction which could be up or down. When you see a stock closing higher on a daily, weekly or monthly basis, it’s an uptrend but if the market closes at a level that is lower than it’s previous closes, we say it’s trending down. This is a lay man’s definition of a trend and it’s not devoid of confusion.

Let’s say a stock add 50k to close at N1.5 on day 1 and shed 30k to close at N1.2 and added another N1 to close at N2.2. On the last trading day of the week, it lost, 75k to close the week at N1.25, do you say it’s bullish, bearish, bullish, bearish? This is a clear definition of confusion and imbalance, only a trader who is glued to his computer 24/7 will be bothered about this fluctuation. Recall my trading experience on MasterCard, the stock fell sharply after I opened a position and after 7 days of patient, it hit my target price.

More Details About a Trend

Understanding a stock’s trend increases your chance of trading in the market direction which ultimately makes more profit. When a stock is clearly in an uptrend, the best decision is to open a long position (buy), set a reasonable profit target and go engage yourself in other activities. You don’t have to stay glued to your system all day.

How to Analyse Stock Trend

To analyse a stock’s trend, I use a simple indicator called moving average. Moving average lets you measure the average price of a stock over a specified period so that you can gauge the overall trend of the market.

The most popular moving averages as of this writing is the 20 days, 50 days and 200 days moving average. The reason these three moving averages are popular is that they coincide with a month, quarter and a year respectively. Investors love to watch the performance of a stock within this period but the most popular and effective moving average is the 50 days.

Why 50-day moving average?

This moving average mimic the performance of a stock in a quarter which is the period listed firms are expected to release their interim report. It’s generally believed if the quarterly earnings beat analyst estimates and outperform previous quarter’s result, the 50 days moving average will rise, and the price tend to stay above it, which means that fund managers are clearly bullish on the stock.

The rule of thumbs on moving averages indicator are:

  • When the 20 day is above 50-day, and 50-day is above 200-day it is a short-term and long-term bullish trend.
  • When the 20 day is above 50-day and the 50-day is below 200-day, it is a short-term bullish and long-term bearish trend.
  • When the 20 day is below 50-day and 50-day is below 200-day, it is a short-term and long-term bearish trend.
  • When the 20 day is below 50-day and 50-day is above 200-day, it is a short-term bearish and long-term bullish trend.

This was the exact tool I explored to determine the overall trend of MasterCard stock before taking a position, I saw the bullish opportunity when the 20 sma was clearly above the 50 sma and 200 sma.

So, when you want to trade your next stock, don’t forget trend analysis, you will increase your chance of making money consistently in the stock market. The idea is to follow the trend or else you would be stopped out.

I hope this helps?

 

Why I Sold Some of My Nigerian Stocks and Bought More American Stocks

Trade American Stocks Online – Learn How I Buy & Sell Foreign Stocks With an International US Stock Brokers for Non-US Residents or Foreign Investors

Trading the stock market has always been my favourite way to make and multiply money easily and during my trading journey, I have come to understand that the stock market isn’t partial; it rewards those who, through diligence and well-planned strategy, understand the perfect time to open positions and exit their trade but burns gamblers seeking a quick return.

I had a discussion with one of my blog visitors on the way forward after he read my guide on the 3 low risk fixed deposit options that will likely outperform stocks in the next 6 months. His portfolio is down by close to 20%, no thanks to Dangote Cement stock and Zenith Bank, these are stocks he anticipated would deliver impressive results this year but aren’t so.

As of this writing, all eyes are currently on Ekiti State governorship election, a lot of local and foreign investors are following the recent happenings to understand and gauge the effect of the upcoming election in 2019. For me, I am cutting down my exposure to the Nigerian stock market, the possible risk of further fall is very imminent. Let’s analyse the chart using some of my favourite indicators, this will help us understand what the next 6 months would be:

Trade American Stocks Online

Using price action analysis on a weekly chart, the NSE all-share index broke the 50-day moving average which also doubled as a key support  and an old resistance level, the index pulled back for 2 weeks and kissed it goodbye: we have seen how the market had performed in the last 30 days with YTD performance now at -4.9%. This is a perfect reflection of the bearish sentiments which, fundamentally, isn’t unconnected to the factors earlier shared on this blog

Why are we bothered about the general market and not individual stocks, after all, there are some stocks with YTD return above 50%, you may ask? My dear, the truth is no matter how strong the fundamentals of a stock is, a larger percentage of share price move is still not disconnected to the investor’s sentiment on the economy. Take a look at Zenith bank, UBA stocks, despite their strong earnings and balance sheet size, they have barely delivered up to 10% return this year, why? the growth of bank stocks is tied to yield on fixed income securities as loan portfolio expansion is expected to be minimal.

I can go on to explain and give reasons I am not bullish on the NSE all-share index, at most 6 months from now but why did I opt for US stocks? To answer this question, I would like to share the chart of Dow 30, an index that tracks the performance of the top 30 most capitalised stocks in the US stock market.

While the NSE all share is set for another weekly fall, the Dow 30 index has just bounced from a key support level to the upside and as the 20-day sits above 50-day and 200-day moving averages, we can confidently say that the index is clearly bullish for stocks. As a smart stock market trader, I would rather be active in a market that is bullish, then allow my portfolio to lose value in a bearish market.

Another reason I would hold more US stocks to our local bourse is “availability of technical tools and data“, the US stock market is very open to international traders; you can access real-time market data on several financial platforms like Google Finance, Bloomberg, and MarketWatch from your personal PC while data on the Nigeria stock market trading is delayed, you can’t access the NSE trading terminal unless you are a premium subscriber or a registered stockbroker.

Lastly, the US stock market provides a larger pool of stocks to pick from. You have access to over 5,000 stocks, ETFs, mutual funds to invest in but I am only trading these selected stocks which are: Groupon, Apple, Cisco, Google, Amazon, Intel, Facebook, Microsoft, Tesla, Netflix, AT & T, Berkshire Hathaway, Bank of America, Boeing, Caterpillar, Chevron, Citigroup, Coca-Cola, Walt Disney, Exxon Mobil, General Electric, General Motors, Goldman Sach Group, Johnson & Johnson, JP Morgan Chase, McDonald, Pfizer, Procter & Gamble, Twitter, Alibaba, Visa, MasterCard, and SnapChat. These are the few stocks available on my broker’s platform for now but I still find these companies liquid, attractive and highly capitalized for new traders.

You don’t have to buy all the companies in the US stock market before you make money, just focus on few stocks with potential, master a trading strategy and trade your plan consistently, that is what successful stock market traders do, they trade like a sniper.

That’s all you should know about my decision to be more active in the US stocks.

Since I shared this content, I have received a lot of response from my blog subscribers on how they can get started trading US stocks and strategies to profit from short-term price moves in stocks like Facebook, Apple, Visa, MasterCard, Amazon, Groupon, Microsoft, etc. 

You can follow my latest weekly analysis of US stocks and see some of my trade setups here.

This group is strictly for traders who wish to trade local and US stocks. Click here to join the group now 

Warning: We will ban you from the group if you post an update that is not connected to the group.

3 Low Risk Fixed Deposit Opportunities that Beats NSE Market

Where to Invest Money in Nigeria – Top Online Savings and Investment Opportunities With Highest Interest Rates on Fixed Deposits Account than Stock Market.

It’s Sunday afternoon and I decided to check the average return on Nigeria stock market in the last 6 months so I could focus and buy more shares in companies that delivered more than 50% this year. In my portfolio, I had few stocks on the green territory and a larger number of equities traded on the negative territory because of the overall market sentiments. The NSE index is down, back to the red region, no thanks to the anticipated US rate hike that led to sell-offs in emerging market currencies and equities. This coupled with rising tension and political risk had adversely affected foreign portfolio inflows to the equities market.

What is going to happen in the next half of the year (2018), you may ask? I must be candid, the next 6 months isn’t going to be smooth for stocks.  The upcoming election is one factor you can’t ignore right now, the heat is becoming hotter and investors, from past experiences, tends to sell their equities ahead of general election, so expect NSE index to be broadly affected by this sentiments.

Another factor is the second anticipated US fed rate hike, carry trade traders tend to favour currencies with a rising interest rate to a stable currency which is the reason emerging market currencies are at risk of sell-offs. The US bond yield is at an all-time high right now and such return is no doubt “a sugar on fixed income investors’ tongue“. The NSE index might also be impacted as a major percentage of capital flows to the NSE comes from foreign portfolio holders.

Another key factor is a general sentiment, we think investors aren’t seeing any positive market or fundamental news that will drive the market again, Oil price which is suppose to be a key driver is up in the last 6 months but have had little or no impact on the NSE market. The correlation, this year, is now negative; as Oil prices reach a new high, investors aren’t factoring such positive indicator into the NSE all share market as witnessed in 2017. I feel such news has already been priced in.

What happens to my portfolio? Well, that depends on the sector you had invested in. While the next 6 months might not be as smooth as you would expect, there are still stocks to buy and enjoy average return above the NSE index.

I have already shared a detailed guide on how to pick stocks in a bearish market, a simple strategy that uncovered my best performers right now. Click here to learn more, maybe it will help you reshuffle your portfolio to select stocks that would do well this year.

For some of us who are still protective in this volatile market and wouldn’t want the bearish trend to wipe out a significant portion of our investment portfolio, I will be sharing the 3 alternative low-risk fixed deposit options that had outperformed the Nigerian stock market index so far. These investment options do not necessarily demand a special skill, financial prowess or consultation with a stockbroker, we are currently exploring them to, not only protect our investment but at least hedge against equity market fall.

As a smart investor, the stock market shouldn’t be the only place to make money, fixed deposit and insurance options are where to invest money in Nigeria

PiggyBank SafeLock

PiggyBank is an automated savings app that lets you save a specified amount (with a “Quick Save” feature for saving at your pace), for a stated number of days after which the fund will be available for withdrawal and if you opt to cash out before expiration, a 5% charge will be deducted from the amount saved.

But here is the catch about PiggyBank that made me recommend the app as one of the best places to save and earn higher interest above the Nigerian stock market; PiggyBank offers a SafeLock feature, an innovative disciplined fixed deposit opportunity that lets you lock away cash for a specified period while your interest is paid upfront.

For instance, if you wish to fix N1,000,000 for a year, you will earn 12.4% upfront, which is N124,000 payable into your PiggyFlex account. PiggyFlex account holds all the interest earned on your fixed deposit, and it’s available for withdrawal.

You can give PiggyBank a try as the six (6) months interest rate estimated at 6% far exceeds the NSE index performance in the same period. In the midst of stock market volatility, you can explore this guaranteed interest income opportunity ahead of the general election fever.

Like I always say, I don’t practise what I don’t preach, Click here to read my success story on PiggyBank Website.

I have already reviewed the other two savings plan you can explore if the stock market seems risky to you.

To learn more about the other two fixed deposit investment plan, click here.

Please note that the NSE market return we benchmarked these fixed income opportunities on, is the first half of 2018.

How I Trade Bitcoin for Serious Profit

How I Trade Bitcoin for Serious Profit With Strategies – Learn my Powerful Cryptocurrency Trading Strategies that Makes Money every time I Buy & Sell

I am an active trader who focuses on local stocks, international stocks and cryptocurrencies: Bitcoin, Bitcoin Cash, Etherum and Litecoin. These are my biggest profit makers as far as investing is concerned, at least the diversifications offered by these asset classes makes me find several opportunities to trade while hedging against the bearish trend in one market.

Today, I will be sharing my strategies and how I have been trading the bitcoin since 2017 using the same tactics I shared in my video course.

Someone sent a mail to me and asked “Oge, beyond stock, where else can I apply the strategy you shared in your video? it’s quite interesting, practical and usable”. When I read his mail, I was quite shocked, why, you may ask? because as of the time I opened the mail, I was already concluding an alternative investment option you can also explore the stock trading strategy I shared in that video on.

For subscribers that bought and had already watched the video, it might interest you to know that the step by step blueprint works perfectly well on Cryptocurrencies too, Bitcoin, Bitcoin Cash and Etherum.

How I Trade Bitcoin for Serious Profit With The Technical Strategy

Lets’ start with the Bitcoin price on a longterm chart:

How I Trade Bitcoin for Serious Profit

From the chart above, you see how the 3 indicators were so perfect in predicting the bullish strength that drove bitcoin from less $1000 to $20,000 before the historic crash that started in February 2018. Did you know that before bitcoin price nose-dived, the indicators had already pointed that price was already overbought?

Bitcoin on a long-term is a no-go area for me; if you are asking for a trade advice or whether to buy and hold for next 3 – 6 months, I would recommend that you send a “SELL MANDATE” to your broker or bitcoin agent. The emerging bearish crossover isn’t what you would bear when price crashes further from the current level of $7,600 to $3500, an estimated 50% possible loss if it eventually occurs.

But if you are looking to play in the Bitcoin space in a matter of days, weeks or maximum, a month, then you can read on to see an opportunity that had just opened an alternative profit potential in the financial market.

Let’s drill down further to the weekly chart:

How I Trade Bitcoin for Serious Profit

Using the strategy I shared in my video, you will also discover that the same bitcoin that is a no-go area for short-medium term trader, is actually oversold on a weekly chart; the price fell sharply last month (May 2018) to a key support level ($7,300-$7500), this is the third time price will test that level before retracement. As of this update, bitcoin is up by 0.28% to $7,686.5.

Since I am only looking for a bullish opportunity to cash in on as a swing trader, let’s drill down again to see what is happening on the daily chart for a better entry.

How I Trade Bitcoin for Serious Profit

Wao! Can you see what I just saw now? There is a bullish sign on the daily chart, two indicators are already pointing to a possible increase in the coming days while the third is catching up. In my video, I showed which of the indicators is a leading indicator to pay more attention to.

Let’s also look the bitcoin cash price:

How I Trade Bitcoin for Serious Profit

All indicators are also pointing to an upward trend in the bitcoin cash market.

My trade decision right now is to wait for a perfect signal like I shared on how to trade like a sniper and buy more bitcoin and bitcoin cash from Nairaex and load into Bitcoin Wallet, at least while I wait for the overall stock market index to reverse its strong bearish trend, bitcoin may be my next perfect alternative trading options. The trading risk at this time is still high because the third (3) indicator is yet to fully confirm but the reversal on the weekly is what I am “banking on” to execute my order.

So, I would advise you to wait until DMI shows a bullish cross on bitcoin chart and allocate a maximum of 20% of your cash into the cryptocurrency market if want to be aggressive, for risk-averse, go for 10% but like I said,  sell off in days, or weeks.

I hope you found this guide on how I trade bitcoin for serious profit useful and if you thinking of upgrading your skill on how to trade stocks and bitcoin for profit, click here to get my video course.

Which Bank Offers the Best Domiciliary Account Services?

Best Bank for a Domiciliary Account in Nigeria – Compare Account Opening Requirements, Fees & Charges, Interest, Exchange Rate and Security for FCMB, First Bank, GTBank, Access, Zenith, Ecobank, UBA, Wema, Sterling, Diamond, Stanbic IBTC, Fidelity

This article will help you spot the best bank for a domiciliary account in Nigeria with 6 useful guides to compare the banks you want to open an account with.

Owning a domiciliary account with a Nigerian bank is not an option again, it’s a necessity for someone that wants to manage and protect his wealth by diversifying into foreign currency portfolio. A lot of Nigerians still don’t know that a domiciliary account is an alternative investment option to consider, now that the USD exchange rate is on a bullish side.

You will find tips on how to open an account with all the Nigerian banks alongside basic requirements you need to have before your account officer can proceed with the domiciliary account opening procedures. I also went ahead to give reasons you should own a domiciliary account; cost savings when paying online, exchange rate gain and access to offshore investment opportunities.

See – How to trade open a US Stock trading account using your Domiciliary account.

Best Bank for a Domiciliary Account in Nigeria – 6 Key Tips

For a new starter looking for the best bank for a domiciliary account in Nigeria, here are basic tips on how to compare FCMB, First Bank, GTBank, Access, Ecobank, Unity, UBA, Wema, Sterling, Diamond, Stanbic IBTC, Fidelity, Zenith Bank, Union and Heritage Bank.

1. Check Monthly Fees

When you go to the bank to withdraw from your domiciliary account at the counter, you will be charged for withdrawer (depending on the amount and whether you used a counter cheque or your own chequebook). Ask your account officer the bank charges on withdrawing, ATM maintenance fees, cheque slip charges and other sub-charges in order not be taken unawares. Two days before I wrote this article, my bank deducted $10 from my account as an annual account maintenance fee and I was wondering how they are maintaining account until I approached my account officer.

2. Minimum Requirements

Before opening a domiciliary account with a bank, compare what the requirements are across selected banks, while some will ask you to deposit a minimum of $100, utility bills, passports, two referees with current accounts, others may be higher.

3. Transaction Limits

Inasmuch as a domiciliary account allows you to make purchases and pay a merchant directly, CBN is still beaming its searchlight on foreign currency transactions, money laundry and so on, and as such, there could be some restrictions on your domiciliary account transactions. A few years ago, CBN mandated all domiciliary account withdrawal to be paid in Naira using official exchange rate and other time, they restricted foreign account transfers to $10,000. These are some of the ways your use of dom account could be limited but you still need to compare how individual banks transactions limit are so you can settle for the institution with flexible policy.

4. ATM Charges

Have you used the debit or credit card on your domiciliary account to withdraw from an ATM machine? I tried it during an emergency and was amazed at the exchange rate my bank applied, it was over N100 lower than what I would have sold the currency per dollar at the black market. You need to compare inter-bank exchange rate on AbokiFX and what your bank currently offers.

5. Mobile and Internet Banking;

You may not be free to walk into a bank to carry out transactions on your domiciliary account every time but with mobile banking app on your smartphone, you can easily check balance, transfer fund, view on incoming flows real time and monitor your account history. Compare features available and how fast mobile applications for your banking services will be across some selected banks so you don’t experience network issues; though, it could occur but shouldn’t be frequently as this could be frustrating.

6. Security

This is the most crucial of all these tips mentioned here. Find a bank that sends security alert and tips to its customers on a weekly or monthly basis, this will help you know the method scammers are using to access users account online. That doesn’t mean you should relent and leave the security of your account to your bank, update yourself and subscribe to some internet banking security blog for useful guides.

Scammers are constantly adopting new strategies, most of which are mobile related, to steal sensitive information like credit cards, from forex account owners and you can’t afford to be relaxed, take actions, buy genuine anti-virus like Kaspersky internet protections.

While these are my 6 basic tips to find the best bank for a domiciliary account in Nigeria, feel free to share comments and suggestions.

How I Trade US Stocks

How To Trade US Stocks From Nigeria & Overseas – Learn How to Open a US Stockbrokerage Account, Pick Profitable Stocks As Non-Resident Citizen Living Abroad.

As a Nigerian who is looking for overseas investment opportunities in a market like the US, it is quite difficult to find an online broker that offers unrestricted access to the financial market. If you doubt, then you can spend some time to research all the regulated stockbrokers in the US, you will notice that one of the countries that are hardly accepted into their client record is Nigeria.  While I understand the regulatory reasons for such decline, and the need to ensure sanity in their global financial market, I still feel there are sincere local traders and investors to consider.

Why are foreigners/non-US resident showing increasing interest in US stocks despite the presence of the local stock exchange and online equities trading platforms in their respective countries? The US stock market remains the world’s largest and most liquid stock exchange in the world. Not only does it give you opportunities to trade fast-growing global brands, but also lets you diversify your portfolio into foreign-currency-denominated assets.  As an investor, you need to hedge your asset against currency risk by diversifying into foreign assets.

As of this update, the number of publicly listed US stocks representing major sectors is more than 7000, and that of foreign listed stocks in the market keeps increasing as they seek access foreign currency capital for expansion.

For us here in Nigeria, the market is a perfect alternative to trade stocks and diversify equity portfolio away from the Naira, especially now that the NSE index performance has shrunk from a peak of 45,000 points in February 2018 to a multi-year low of 24,000.

As of this writing, the NSE index has just returned to a negative path, posting -15% YTD on the back of higher than expected selling pressure. Besides, after the 2008 equity market crash, it seems retail investors do not have confidence in our local bourse again; most stocks in the banking, consumer, oil and gas, insurance and industrial sector are down from their highest price level; some stocks that traded as high as N100 – N150 are even selling for a paltry N5 to N10.

This bearish trend as pointed out in my post on how to pick stocks in a bearish market is very strong, the dollar against emerging market currencies is gaining momentum as the FED reserve increased US rate from 1.5% to 1.75%. Normal, foreign portfolio investors, who are looking for “carry trade opportunities”; buy currencies with increasing yield and sell currencies with falling yield.

Also, the political landscape isn’t clear again; no thanks to political insecurity. Even after impressive year-end results, fund managers are re-adjusting their portfolio to cushion the effect of political risk.

If you look at the NSE market outlook in near-term, it makes more sense to cut equity exposure as a short-term trader until the market regains its strength and diversify into the foreign stock market.

The best investing strategy for Nigeria investors:

Diversifying into the US stock market offers a perfect hedge against exchange rate risk arising the US dollar strength against the Naira. The US stock market lets you trade various asset classes beyond equities; metals, energy, and indices. Each of these asset classes tracks the performance of virtually all the segments of the US and world economy, for instance as the US dollar index continues to strengthen against emerging market currencies, there is a tradable ETF that tracks that movement, and as the Oil price increases on rising tension in the middle east, there is also an Oil ETF shares to trade, even the overall market indices, S & P, Dow 30 and Nasdaq have their ETFs too. Right now, everyone is talking about AI (artificial intelligence), and fintech, you can also leverage the stock market and tap into the multi-billion dollar opportunities in this emerging technology.

Another catch I love so much about US stocks is that there is no limit to their daily price movement, a stock can rise and fall by more than 100% depending on investors’ sentiment. Take a look at the snapshot of two stocks that gained 143.12% and 105.23% on a single day:

You won’t find such an opportunity in our local bourse as regulatory and allowable changes are capped at +/- 10% daily.

The summary of these is that you need to look beyond the local stock market by giving foreign stock trading a try, but not without having a proper understanding of strategies for picking stocks that will rise.

Click here to join my private Whatsapp group and learn how to diversify into foreign assets for massive growth.

I have also added US Equities Market to this blog so you can follow my weekly US stock analysis and trade setups.

This Untapped High Yield Savings Plan Is Better Than Treasury Bill, Bond & Fixed Deposit

Best High Yield Investment Opportunities In Nigeria Only a Few Knows – Learn How To Find Most Profitable Untapped Long-Term Investment Ideas

When people talk about saving money for future projects or as a way to be liquid and not run out of cash in the next 5-50 years, the next place you see them go to is the bank. Why?  because they don’t know any better alternative savings opportunity that could practically earn more interest and provide streams on cash flow for long-term projects.

See – How to Create Multiple Streams of Passive Income for Yourself

See – The Perfect Guide to Know Where to Invest Your Money

Today, I decided to research better savings options one could explore as an alternative to banking products with attractive yearly interest return (after adjusting for inflation) higher than fixed income securities, then I remembered a friend who proposed an insurance savings plan that offers up to 43.3% return annually.

This sounds interesting! “I don’t believe this, you may exclaim” but it’s real. Such a return isn’t easy to come by, especially in a very high-risk environment like ours. Even when you adjust for the last reported inflation of 12%, you still have 22% positive interest to enjoy.

Where else can you find a risk-free opportunity like this? Treasury bills, bonds yield, even though they are risk-free too, are subject to economic risk. The yield on 1-year TB has fallen sharply, from a high of 22% in 2017, to a recent low of 12%. The downward trend is a result of FGN decision to lower exposure to the domestic debt since its more expensive to finance compared to foreign denominated debt.

I really don’t know whether to call this plan a savings or investments, but since you would be required to make a quarterly, semi-annual or annual contribution, let’s call it a savings plan. From the return above, it is clear that this insurance product earns more than any long-term fixed income security (including bond) you could ever think of right now, YES! it beats treasury certificates, bonds and fixed deposits.  Besides, long-term investors looking for a reliable low risk, stable and high return investment option devoid of risk should take this plan seriously.

See – Best Low-Risk and Steady Return Mutual Funds to Invest in Nigeria

But, the problem now is that when you preach insurance to people, they feel you are reminding them of “death, accidents or unexpected events”. No, this isn’t one of them, this insurance policy known as a Flexible Endowment Plan is one of my best long-term savings portfolios right now.

Best High Yield Investment Opportunities In Nigeria Only a Few Knows

It is a low-risk high yield plan that combines protection and investment with the following benefits.

  • It provides for guaranteed payouts at regular intervals in three instalments.
    • 1st Payment of 25% of face amount at ¹⁄3 of the policy term (5th year)
    • 2nd Payment of 25% of face amount at ²⁄3 of the policy term (10th year)
    • 3rd Payment of 100% of face amount including the accrued reversionary bonus at full maturity (15th year)
  • Provides for full payment of the face amount in the event of the death of the policyholder during the period of insurance.
  • Provides for full tax rebate annually.
  • Provides for an annual reversionary bonus (interest) payable in addition to the face amount or earlier death at the rate of 4% or N40.00 per thousand.
  • Provides for cash values on the basic policy and the declared reversionary bonus.
  • Provides for a loan of up to 70% of cash value after three years of running the policy.
  • Provides for policy surrender after two years of payment and maintenance of policy.

Additional Riders

  • Waiver Of Premium –This benefit comes into force at a time when a policyholder is unable to perform his normal duties as a result of either accident or critical illness for a minimum duration of six months. Premiums that fall due within such period are waived and the policyholder will not be charged for it.
  • Permanent Total Disability–This covers the loss of body parts that make it impossible for the customer to continue to work as he used to. At this point, the policy is treated as being matured and full benefits are paid. Examples of such disability are the loss of both eyes, both hands and both legs (if a footballer).
  • Accidental Death, Dismemberment and Weekly Indemnity Rider –This covers loss of parts of the body following an accident as stated in the schedule of Indemnity attached to the policy document. The principal sum under this benefit rider is N2,000,000.00.

Why is this low-risk, high return investment a preferred option for smart wealth protection strategy? It offers an attractive annual return estimate of 43.3%  on your investment without exposing you to economic, political or market risk.

Investment table:

The table below shows different insurance cover you can subscribe to, and their respective premium and payouts on maturity.

Investment Volume
Annual interest
Annual premium
Semi-annual
1st partial maturity
2nd partial maturity
Full maturity @ 15thyr
Accrued interest/ bonus
#5,000,000
200,000
461,350
239,940
1,250,000
1,250,000
5,000,000
3,000,000
#10,000,000
400,000
922,100
479,530
2,500,000
2,500,000
10,000,000
6,000,000
#15,000,000
600,000
1,382,850
719,120
3,750,000
3,750,000
15,000,000
9,000,000
#20,000,000
800,000
1,843,600
958,710
5,000,000
5,000,000
20,000,000
12,000,000

How did I arrive at this double-digit growth interest return? Let’s say you subscribe to an annual investment cover of N5,000,000 (refer to the table above), you will be required to pay a premium of N461,350 annually or N39,000 monthly. On your annual N461,350, you will earn an annual bonus of N200,000 which should increase your portfolio value to N661,350 in Year 1, that’s like 43.3% interest return on a yearly basis.  At the end of 5 years, you would have access to 25% of the insurance cover of N5,000,000 which N1,250,000 credited to your bank account. This is like 54% of your cash savings of N2, 306,750 while the N200,000 bonus is already grown to N1,000,000 (in 5 years).

The N1, 250,000 payout is enough to finance a project or start another business that will generate another stream of income to your account. You can even plough back your cash payout into the insurance plan.

Your second partial payment of N1,250,000 comes in subsequent 5 years, that’s like N27% of N3, 363,500 cash savings net of initial payout in the first 5 years. Your annual bonus of N200,000 would have grown significantly to N2,000,000.

At the end of the 15 years investment period, you would receive N8,000,000 (N5,000,000 insurance cover at maturity plus N3,000,000 accrued bonus for 15years (N200,000 x 15). This means you would have received a total of N10,500,000 (N2,500,000 for the first 2 payouts and N8,000,000 cash payout on maturity).

When you compare what you had saved, N416,350 x 15 years, N6,920, 250 to the payout of N10, 500,000, you would have enjoyed an additional interest of N3, 579, 750, which is 51.7% return on your long-term savings.

If you also looking for more of the best high yield investment opportunities in Nigeria that beat treasury bills bond and fixed depositsee my dividend income stock analysis.

How to Pick Stocks In a Bearish Market

How I Pick Nigerian Stocks To Buy In a Bearish Market – Learn How To Analyse The All-Share Index Using Technical Analysis and Pick Fast-Rising Stocks

The Nigerian stock market seems to have lost the momentum it gathered at the beginning of the year. As of this writing, the YTD performance of NSE index is less than 5% compared to the impressive 16% return achieved.

What could have been the driver of the bearish market? Some analyst attributed the fall to normal market correction, others felt there is no major news that could support the next bullish run. I had earlier expected the upward trend in the oil market to be a key supporting factor but as the price of oil inch higher every week, the market seems to have taken a “U” turn. My next question is “should one sell-off existing stocks and wait for a bullish signal “? and How can one pick a good stock in a bearish market like we are seeing now?

For traders with existing stocks, I believe it’s time to cut your loss and cash out as the bearish market trend. Take a closer look at the chart below, the market sell-off seems to be stronger every day.

Maybe you should look into my low-risk and high yield investment ideas right now pending when the stock market will bounce back.

pick stocks in bear market

This chart may look confusing to you but if you had bought my trading strategy course on “Little Secrets that Make Big Money In Stock“, you should be able to understand the market trend displayed on the chart above.

The summary of this chart is that NSE all-share index may go down further as pointed out by the MACD and DMI. We could see the index fall to 38,000 level as selling pressure continues to increase week by week.

According to BusinessDay (publication on May 28th, 2018), this bearish trend is connected to a massive repatriation of the foreign portfolio as the yield on US 10-year bond rises to 3-year high above 3% following the US interest rate hike to 1.75%. Ordinarily, a rate hike in a country attracts investors to fixed income securities, so this is a normal capital flows that affect emerging markets more. Another factor is the political tension and party congresses as the country’s election draws near, besides, the USD/NGN exchange rate is under pressure right now: the naira has depreciated to N368 from N360 in the investors and exporters window.

To address the second question which is “How can one pick stocks in a bearish market”, I would be discussing my top 2 stocks to watch closely this year. They are Cement Company of Northern Nigeria (CCNN) and BetaGlass. From the time I recommended these stocks, the former has added N6-N10 to its share price while the latter has added N4-N5. What caught my attention to these two stocks is that they keep hitting new highs as the general market witnesses further sell-offs.

A stock that keeps gathering momentum in the midst of stronger bearish market is worth looking into, there must be something peculiar only few traders are seeing. While a good number of stocks are falling off the cliff, creating more south-ward space away from their the green territory, CCNN and BetaGlass have continued to top gainers chart, and eventually, become investors’ appetite.

Well, you could be partly right to attribute the performance to fundamentals, but I rely more on technical when picking stocks in a market like this.

As a smart trader, here is what I do to find great stocks in a bearish market:

  • Check the overall market performance and bearish sentiment.

The NSE market index began its bearish run in February 2018 after it posted an impressive run of 16% in January. The market has since dropped from a peak of 45,000 basis point to 40,213, that’s like 12% off the 16% to bring the YTD return to 4.9%.

  • Look for stocks that are showing bullish strength in the same period.

Sincerely, it is very risky to play in this type of market. If you do, you are already going against the first general trading principle. don’t trade against the trend, the trend is your friend, so why make the trend your enemy? If you insist, then don’t trade what you can’t afford to lose.

The NSE market index is down by 12% in the last 4 months (February – May), but here is a stock that had also increased in the same period.

pick stocks in bear market

BETA GLASS is a company that manufactures and sells glassware. The Company provides glass bottles and containers for soft drinks, wine and spirit, pharmaceutical, and cosmetics companies.

The stock, as of this writing, has gained close to 17% in the same 4-month period the NSE market index lost 12%. From the chart above, BETA GLASS has continued to post a positive monthly return since the start of the year, rising from N52 in January, crossed February, the exact month all-share index showed a sign of sell-off, to hit an all-time high of N87.

BETAGlass is currently trading for N83 per share with YTD return of 56.6%, a clear market-beating figure.

See – How I Make Money Trading Penny Stocks

  • Check Fundamentals of the stock

Even though I employ technical analysis when picking stocks in a bearish market, it doesn’t mean that that the fundamentals of the stock doesn’t matter, at least, your selected stocks should be posting good numbers on key line items. This will help you avoid pump and dump stocks that are only growing on one-time news.

Read my guide on how to analyse the quarterly result of a company. You will have a better understanding of fundamental analysis.

  • Is this the time to buy?

BETAGLAS stock may be due for reversal; all indicators on the monthly chart point to an overbought stock; expect a sell-off as traders look to take profit soon.

pick stocks in a bear market

On the daily chart, MACD bearish crossover is a warning sign that BETAGlass stock sell-off is imminent, so I would advise you to wait for a bullish sentiment as long as the fall doesn’t exceed the general market index.

pick stocks in a bear market

Back to my question, is it the right time to buy? No, wait for a pullback and ride the next move once MACD bullish crossover surfaces on the daily chart.

In summary, this is how I pick stocks to buy in a bearish market and I hope you would find this guide useful for trade decisions. But like I said earlier, this strategy isn’t devoid of risk, you may lose you cash.