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.

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.

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 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.

4 Investment Opportunities in the Banking Sector You Can Explore

How To Invest In Nigerian Banks – Learn The 4 Best Investment Opportunities In Banking Sector -Fixed Deposits, Commercial Papers, Mutual Funds and Stock Trading 

A lot of people thought that banks are financial institutions designed to only accept a deposit/mobilise funds for savings purpose and make it available to their customers upon request, they don’t that know beyond the normal savings and withdrawal services, there are investment opportunities offering better return compared to the paltry 2-3% interest income.

See – 4 Top Investment Apps You Should Download for Higher Returns Than your Bank

In this dynamic environment, where the price of essential amenities is constantly surging higher every day, you can’t afford to be mediocre or allow the value of your savings gets wiped out by inflation which, as of this writing, sits at 13-14%. Rather than allow your bank take your money, pay your 2-3% interest and advance your cash to corporate customers at a higher interest of up to 22%, there are alternative investment options you can try now.

This article explores practical ways you can invest in Nigerian banks at moderate risk and earn returns on your investment.

See – How to create multiple streams of passive income for yourself even if your salary isn’t enough.

How to invest in Nigerian banks – 4 Opportunities to Explore:

  • Fixed deposits 
  • Commercial papers
  • Mutual Funds
  • Stocks

Investment in Fixed Deposit

If you are a customer who operates a savings or current account with a bank, you can take advantage of the returns on fixed deposit by transferring your idle cash balances; funds you may not need in 3-6 months. All you need to do, send a letter to your bank requesting for a certain sum of money to be transferred to a fixed deposit, duration and effective date. The minimum tenor of fixed deposit investment is usually 30 days but the maximum depends on the bank. Interest on your principal is calculated on a simple interest basis. Also, the total interest-earning accumulated over the investment period is subject to a withholding tax of 10%.

Commercial Paper

 Commercial papers are unsecured promissory note issued by a company to holders – such short-term debts are used to finance other short-term liabilities. You need to approach your bank to inquire about this investment and the terms of the arrangement. Usually, commercial paper is issued by banks with stable earnings or companies that have a good credit history.

Mutual Funds

This is one of the best short-term investment available to bank customers in Nigeria. Most banks operate a mutual fund, a financial window that mobilises funds from interested investors and pays a guaranteed interest on a monthly, quarterly or annual banks. The interest payable to account holders are determined by NIBOR, Nigerian Inter-Bank Offer Rate – the rate bank lends to one another.
 

Stock

If you are looking for a higher return opportunity compared to other windows mentioned above, the stock exchange market is the floor to play in. While investing in banking stocks comes with its own risk, the reward can be huge when you do a thorough analysis your bank’s future potential compared to its present stock price.

Aside from price appreciation, you can also earn a dividend on your equity shares.

See my detailed guide on how to analyse and pick banking stocks.

Final note

Before you invest your fund in Nigerian banks, please consult your financial adviser for more details.

This Mutual Fund Makes More Money When Naira Loses Value

Where to Invest Money In Nigeria During Economic Collapse – Learn The Best Mutual Funds Investment Opportunities During Economic Recessions.

So far, the Dollar to Naira exchange rate has been stable for more than 10 months now, a positive trend that is directly tied to the bullish oil market, increasing foreign reserve and the introduction of an alternative and highly liquid FX market; investors and exporters window where the exchange rate is market driven.

Foreign investors confidence in the economy is also at an all-time high, at least you can see from the data presented on my post on how to make money from the stock market even when you can’t trade yourself.

Nigerian is no doubt an oil-driven economy, the short-medium term bullish oil price is the major factor driving the overall economic growth; thanks to the OPEC decision to cut production quota in 2016.

The US proposal to withdraw from the IRAN nuclear deal is another supporting factor that is believed to have driven the commodity market to newer higher (above $75), the market has already priced the possible US pull out knowing that Donald Trump had continuously criticised his predecessor on IRAN Nuclear Deal.

All these are big reasons, analyst are bullish on the crude oil in the short-medium term.

As of this writing, CBN foreign reserve is at $47b mark, a result of greenback supply from crude sales, foreign direct investment (FDI) (into the financial market) and sales of EURO bond, the federal government alternative source of funding infrastructural development at a lower interest rate.

While this news is attracting hot money into the economy and positive for NSE investors, it is no doubt exposing the economy to a greater risk that could outweigh the benefits if diversifications are on FG priority list. A larger percentage of the FDIs aren’t invested into long-term or developmental projects, but are channelled towards the financial market; these foreign portfolio managers are looking for short-medium returns from the equities and bond market.

The big risk here is that these foreign funds can easily be withdrawn from the financial market if an unfavourable news ( like Oil market fall, possible resumption of attacks on oil facilities in Niger Delta or political instability) breaks out.

Looking at historical trends when the CBN reserve growth was stalled and FDI suffered setbacks on oil production coupled with the fall in Oil price to an all-time low, we saw how the greenback (dollars) exchange rate to the Naira increased significantly to N500, a level that made importation difficult.

The stock market at that point fell as investors pulled out fund to a safer haven, capital flight was an everyday activity as foreign companies repatriate capital (in USD) back their home country while manufacturers restored to local farmers to sustain their business. The period was indeed a tough one.

However, even in tough and rough financial markets, you might ask, can one still find alternative profitable investment opportunities in Nigeria? My answer is “YES”

For those looking for opportunities in tough times, here is a look at the best-performing mutual funds to channel your funds to when the Dollars to Naira exchange shows another sign of increase:

FBN Nigeria Eurobond USD Fund

Although, it is usual that during an uncertain difficult period in Nigeria where USD/NGN exchange rate is rising faster, investors tend to buy into fixed income investment opportunities like the bond, and treasury bills. But, smarter investors like us invested in FBN Nigerian Eurobond, a USD denominated fund, a better place to invest to explore double return. The reason isn’t unconnected to the fact that the fund is fully invested in USD denominated debt instrument which doesn’t only offer a fixed interest income but enjoys a higher income from translation gain.

Translation gain is the gain that results when amounts stated in one currency are translated into another currency. Assuming you invested $1000 ($ = N305) into FBN Eurobond in 2014 with an annual interest rate of 7.5%, that’s like $75 receivable on your investment.  As of this writing (2018), a USD = N360, that’s like an additional N55,000 added to your portfolio (N360,000 – NN305,000) and  N108,000 ($75 x 4 x N360) interest income.  You will notice that a major percentage of your portfolio gain will come from the forex conversion.

The profitability of this investment idea depends on the USD/NGN exchange rate, you are highly advised to always follow the oil market closely, economic and political activities for guidance on how the dollar exchange rate will play.

Personally, I feel this is one of the reliable fixed income investment (where to invest money in Nigeria during economic collapse) any parent can subscribe their kids to, why? despite the introduction of the investors and exporters windows, Nigerian is still an oil economy and such dependency makes us prone to a sudden economic shock, that may scare foreign investors.

Best Low-Risk, High Return Fixed Deposit Investments You Didn’t Know

Best Investment Opportunities In Nigeria – Where To Invest Your Money With High Return, Low Risk – List Of Untapped Fixed Income Financial Opportunities This Year.

When I drew the business model and jotted-down content ideas of this blog, I never considered alternative fixed income investment opportunities as a category to be added too soon, but as a flexible investment entrepreneur who listens to the subscribers’ request, I felt it isn’t a bad idea to talk about the investment options you can explore (amidst rising cost of living) beyond the stock market but with key focus on risk tolerance and capital protection. Besides, it is not everyone that can swallow the risk that comes with stock investing.

My focus on risk here means that I would be screening investment options strictly on legal, risk level and return potential; I can’t undertake a long or short term investment that wouldn’t let me sleep well at night, if it’s going to make me get worried, then I won’t give it a try, that’s my mantra.

I had some idle cash that generated from financial services rendered to a corporate client and decided to scout for the best alternative investment opportunities in Nigeria offering high-return above and twice the inflation rate of 11 – 13% in 360 days with the lowest risk of capital loss. This time, I wasn’t going save the cash and allow my bank use it for business nor go for the fixed deposit investment return option of 8 – 9% p.a offered by our local banks, I wanted something better than bank and money market rates. Besides, my benchmark rate was set at 15% per annum (the average inflation rate figure as of this writing) which makes it even more difficult to find a financial investment opportunity offering such a higher return at low risk.

From 2014-2017, 1-year treasury bills offered up to 22% but as economic risk reduces on the back of a bullish oil market and stable exchange rate, it went down to 15%. So, if you had been a firm believer of TBs as the best-fixed income investment, you probably should re-think your portfolio allocation.

The only investment that could possibly beat the inflation rate of 11-13% is the one invested in professionally managed equity mutual fund with a track record of impressive positive performance. Some of these funds posted up to 52% return on investment in 2017; if you had invested N1m, you would have ended the year with a portfolio value of N1.52m.

You know what? I still wouldn’t give it a try because the stock market isn’t devoid of risk, this is not cash I would love to expose to share price fluctuation in short-term. After all, a lot of equity mutual funds also posted a negative return.

Mutual funds, like I said, are good long-term investment options; managers of these funds basically pick stocks that will deliver long-term gain from share price appreciation and dividend income growth.

On a lookout for other lower risk short term opportunities, I discovered the three emerging high yield and secured investment providers no one is actually talking about, while these investments are still new in Nigeria, some smart businesses entrepreneurs like us are already cashout from the model. It is a lending business opportunity.

You are aware of loan lending platforms in Nigeria like Pay later, C24, Kia-Kia, etc. These guys are taking advantage of the personal finance loan business gap banks couldn’t fill to generate billions of naira.

Let’s take a look at a personal loan lending platform and how much they charge as interest when you request for loan:

Best Investment Opportunities In Nigeria

This snapshot above is the interest repayment of N115, 028.69 payable monthly on N620,000 loan request with 7 months tenor. You can see the total amount payable at maturity, N805, 200.83 which is equivalent to 29.8% interest return to the lender.

Isn’t this outrageous? Now, imagine the number of users who request for a loan every day!

My dear, this is what banks make on you when you keep your cash in a savings deposit account for 7 months and in return pay you 1.75% interest (3% x 7/12 months).

These lenders, because they may not have enough capital to finance growing loan request, resort to borrowing more cash from individuals or corporate organisations with a promised return of up to 20 – 39%. The financial opportunities here is to plug in as a registered lender who gives to this registered and CBN-regulated credit company and earn a higher return than the rate on fixed deposit and treasury bills investments.

Click here to Download and Gain Access to all Untapped High-Yield Fixed Deposit Providers in Nigeria & Earn Up to 20-39%

Best Investment Opportunities In Nigeria With Low Risk and High Return

The potential of fixed deposit investment opportunities is no longer held by banks again but personal finance and SME loan lenders who are able to charge higher interest on a quick personal loan to salary earners or business owners to finance short-term needs. The companies have perfected borrowers’ credit and background checks to the extent that they only approve loan whose default ratio is less than 0.5%.  To encourage quick payback, they initiated a model that compensates borrowers who pay on/before maturity with higher loan disbursement, such that if they meet up to their current obligations, they can request for more loan.

Here are the 3 credit providers you can invest in:

Option 1

This is a licensed microfinance bank that offers consumer finance banking services. They started as a credit company before they got approval from the CBN to carry out microfinance operation.

As a lender on their platform, you can enjoy a higher return of up to 22% per annum depending on your capital.  Here is a table showing your deposit sizes, duration and percentage return.

Best Investment Opportunities In Nigeria

This micro-credit company requires an online registration of potential lenders and verification of identities using BVN and government-issued ID card before approval and if you are successful, you would be required to deposit into their corporate account, once payment is confirmed, you will receive an investment certificate showing the amount invested, maturity date, tenor, rate, WHT and full value.

Here is a typical return on N400,000 invested I invested in this company for 360 days:

best investment opportunities nigeria

Please note the following:

  • The interest on this investment is subject to 10% Withholding Tax (WHT).
  • The investment and the accrued interest will be rolled over at the prevailing money market rate if we do not receive instruction from you on or before the maturity.
  • The terms and conditions as contained in the Fixed Deposit Account Opening Form are hereby incorporated by reference with the same force and effect as though fully set forth herein, which terms and conditions may be changed by the company at any time without prior notice.
  • The terms and conditions contained in the Fixed Deposit Account Opening Form can be accessed via Terms and conditions
  • Where you request to withdraw funds prior to the maturity date, the may, in its absolute discretion, approve/reject a request for early withdrawal. Where such early withdrawal is approved by the company, a penalty charge of 50% of the accrued interest will be applied.

Option 2 (Exclusive)

This lender offers a better and higher return of 26-39% per annum compared to one mentioned above. The attractive feature of this investment option is that your interest rate is not dependent on deposit size of N20,000, besides, all loan disbursed are insured which means that if borrowers defaults, there is a chance of recouping your cash back.

Best Investment Opportunities In Nigeria

This is how this option works:

  • Browse loans to creditworthy borrows who have passed all18 different credit check and loan criteria.
  • Lend to borrowers at a higher rate.
  • Earn monthly return; direct deposit to your bank account.
  • Pay 1.5% of your return as operation fee.

Options 3 (Exclusive)

This provider has disbursed over N20 billion to 400,000 salary earners in Nigeria.

This is a sample advert from this credit company on BusinessDay Newspaper, one of the most respected business and investment dailies in Nigeria.

Best Investment Opportunities In Nigeria

As I said, these three platforms are registere and regulated by the Central Bank of Nigeria, so you are assured of capital protection and returns on maturity.

When I discovered these platforms, I don’t even bother about investing in my bank’s fixed deposit offer of 6-9% per annum when I can earn a solid low-risk return of 20-39% per annum.

Would you still invest in your bank’s fixed deposit? I guess it’s a capital NO, then, Click here to Download and Gain Instant Access to the Contact of these Untapped High-Yield Fixed Deposit Providers in Nigeria and Earn Up to 20-39% Per Annum

Contact: You can contact me for inquiries and questions on 08084219399. These providers are CBN regulated and NDIC insured.

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.

Best Online StockBroker For Non-US Residents or Foreigners

Best Stockbroker for non-US residents, foreigners or international investors you can open a global stock trading account, pick profitable top gaining stocks on Nasdaq, AMEX and NYSE

If you are a non-US resident looking for tips on opening a low-cost stock brokerage account in the US so you can easily trade shares of listed companies from the comfort of your home, or office, this investing guide contains my experience and how I gained access to the world’s largest and most liquid stock exchange platform.

Yes! the US stock market remains the most attractive financial trading platform in the world; not only is it because it has the highest number of listed companies of any market size from different countries but also offers you the easiest route to tap into the numerous wealth creation opportunities in the US market; technology, healthcare, real estate, finance, construction, etc

When you gain access to the US stock market, you have an unlimited opportunity to trade the finest, fast-growing and most valuable companies in different stock exchanges like NYSE, AMEX, Nasdaq & OTCs.

During my search, I realised that the real challenge typical non-US residents or international investors face wasn’t the availability of US brokers but finding the regulated and trusted stockbrokers that accept retail investors with little capital. Some even, accept and reject applications from selected regions due to international regulatory policies.

My first encounter with a US stockbroker wasn’t even appealing: I met all their minimum account opening requirements but couldn’t move ahead because their initial deposit as t then was $500 ( at an exchange rate of N360, you need N180,000), by the time you factor additional commission on trade, miscellaneous fees, e-tax statement, and so on, I guess you properly would re-direct your search.

Update:  Sogotrade broker no longer accepts Nigerians.

Best Stockbroker for non-US residents, foreigners or international investors & basic requirements:

To summarize this guide, here are the basic requirements you need to make available before opening a US stock brokerage account as a non-US resident or international investor.

  • Government issues ID ( National ID, International Passport, Drivers’ License) for personal identification.
  • Utility bill (PHCN for almost 3 months ) or bank statement showing your physical address. The address on your document must correspond with the address to fill online.
  • Go to ChoiceTrade.com, my preferred and recommended regulated low-cost stockbroker for non-US retail investors.

ChoiceTrade is the leading stockbroking firm in the US, the platform offers the cheapest transactions fee compared to other US Stockbrokers like ETrade, TDAmeritrFidelityleity, and Schwab.

While other Stockbrokers require a minimum initial account funding of $2,000, $5,000 and $10,000, ChoiceTrade is pegged at $100.

Best stockbroker for non-US residents

Before you register on this platform, you need to cross-check your documents and make sure the information you provide during registration (personal profile, investment records, etc) corresponds with the details on the documents submitted. Any discrepancy may lead to termination of your account.

After filling the forms you will be required to scan and send your government ID and utility bill for review.  For registrations submitted during business days, you will receive a response on the status of your applications and if approved, a welcome email will be sent to you with your ChoiceTrade account number and login details.

How to fund your ChoiceTrade account:

ChoiceTrade offers various funding options but I recommend “bank wiring” via international transfers from your local bank: it’s faster and safer except that the rising cost of international transfers from certain countries.

The last time I wired fund from my local bank in Nigeria to ChoiceTrade, the total fund sent was $50 + the amount funded.

Here is a recent update on ChoiceTrade website:

IMPORTANT NOTE: In order to fund your account with a wire transfer, you must have a bank statement on file with ChoiceTrade from the bank and account where the wire transfer will originate. Your name and address on the bank statement must match the name and address on your Choicetrade account. Please do not initiate a wire transfer unless you have provided us with a correct bank statement. If the bank information does not match the wire transfer when it is received, your wire will be returned. No exceptions will be made to this requirement. 

To fund your account, submit these details to your bank:

WIRE INSTRUCTIONS:
Bank Name: BMO Harris Bank, N.A.
Bank Address: 111 West Monroe St., Chicago, IL, 60603
ABA # of Bank: 071-000-288
SWIFT (foreign only): HATRUS44
Beneficiary Name: Electronic Transaction Clearing, Inc. Settlement Account
Beneficiary Address: 660 Figueroa Street, Suite 1450, Los Angeles, CA, 90017
Beneficiary Account: 2459865
For Further Credit To: Your Name / Your ChoiceTrade Account Number (Beginning with “01”)
NOTE: You must include your ChoiceTrade Account Number on the wire document, or your wire will be returned.

That’s all for now!

Update, ChoiceTrade no longer accepts Nigerians, Click here for a guide on how I still trade US stocks for profit.

Top Gaining Insurance Stocks To Watch This Week – 23nd April

The NSE All-Share Index and Market Capitalization depreciated by 0.28% to close the week at
40,814.89 and N14.743 trillion respectively.

Similarly, all other indices finished lower with the exception of NSE CG, NSE Premium, NSE-Main
Board, NSE 30, NSE Banking, NSE Oil/Gas, and NSE Pension indices, which appreciated by 1.08%,
1.38%, 0.54%, 0.13%, 2.34%, 0.73% and 1.42% respectively.

See – NSE weekly stock market report here

As usual, we select our top stocks to watch from a pool of stock that closed last week on a positive note. But, something is quite interesting about my pick this week; the two stocks, I am going to buy and hold for two weeks are insurance stocks.

Insurance like I shared in my post on how I analyse insurance stocks, is one of the financial products that are difficult to sell in Nigeria; the adoption of insurance policies in this part of the world is very low which is even evident in the sector’s contribution to GDP growth. However, this doesn’t mean you should avoid the big opportunities inherent in the sector; some companies are actually doing well. I shared the 3 key ratios to uncover top insurance stocks in that post and when you combine that with the potential of trading penny stocks, I still feel, insurance is a sector to look into but not without caution.

Let’s see the two insurance stocks on my radar:

Custodian And Allied Insurance Plc

The stock open at N4.9 to close at N5.09,  3.8% growth but here is why I picked the stock:

  • It is trading at an all-time high right now.
  • Investors’ sentiment is largely positive as the latest financial result looks good, no wonder the stock is up by 33.9% YTD, outperforming both insurance and NSE indices.
  • Technically,  the stock is trending up on the daily, weekly and monthly chart.

Top Gaining Insurance Stocks In Nigerian Stock Market

Advice:  Buy now and take profit at N5.34-N5.5.

NEM Insurance Plc

The stock gained 22k to close the week at N2.62, 9.17%. NEM is one of the most profitable insurance stocks to watch this year as the company’s result so far is impressive. I have already analyzed this stock extensively when I posted my guide on “how to trade insurance stocks“. You will recall that I ended my verdict on NEM stock as “overbought” when it traded at N2.7: there was a possible fall as investors were expected to profit.

Watch this chart closely:

Top Gaining Insurance Stocks In Nigerian Stock Market

In line with my forecast,  NEM actually fell from N3 to N2.64 (the yellow region).

Here is why and when I will buy NEM insurance:

  • The overall sentiment on this insurance stock is positive on the weekly and monthly chart but the daily chart isn’t fully bullish yet.
  • The latest financial result of NEM insurance is on point.
  • NEM insurance is up by 66.4% YTD, outperforming the insurance and NSE indices.

Verdict: Wait for the stock to show more bullish sign this week and buy at N2.8 with a target profit of N2.94-N3.08.

That’s all for now. I hope you will follow this two insurance stocks in the next two weeks to see how they performed.

How I Make Money Trading Penny Stocks in Nigeria Stock Market

Best Penny Stocks to Buy in Nigeria – Learn the Fundamental & Technical Analysis to Know How to Invest In Profitable Penny Stocks in Nigerian Stock Exchange.

Penny stocks in the Nigerian stock exchange market are small equities with relatively lower prices ranging from 50k to N5, they are small-cap stocks investors can make money on, via share price appreciation.

Local and foreign equities investors are showing growing interest in penny stocks because of their lower prices. Besides, 80% of emails and SMS I receive from newbies interested in stock market investment revolves around penny stock recommendations and the reason isn’t far from the fact that they can buy more units even with little money.

While some investors are buying in anticipation of improvements in their status and future potentials, others might be buying these stocks for the quick return it offers, say 1, 3 to 6months.

Penny stocks, when compared with big-cap or well-capitalised, offer the potential of earning greater returns on investment in terms of share price appreciation. For example, it is easier for an 86k stock to rise to N1.6 or gain 100 per cent in price appreciation in weeks than a big cap stock like SEPLAT trading at a price of N590 to double to N1,080.

Continue reading How I Make Money Trading Penny Stocks in Nigeria Stock Market

Top Gaining Stocks to Watch This Week, 3rd April

The NSE All-Share Index and Market Capitalization appreciated by 0.08% to close the week at 41,504.51 and N14.993 trillion respectively.
Similarly, all other indices finished lower during the week with the exception of the NSE Premium, NSE Consumer Goods, NSE Lotus II and NSE Pension Indices that appreciated by 1.15%, 1.73% 1.58% and 0.34% respectively

On a weekly basis, we pick top stocks to watch from the list of previous week gainers, these are stocks we think will continue their upward move following week.

Wema Bank

The banking stock gained 24k to close at 99k (from a market opening of 75k), that’s like 32%. Technically, the stock is looking good and set to continue its move as all indicators, on daily, weekly and monthly chart, signals a buy entry.

Caverton Offshore Support

The oil stock gained 18k to close at N2.67 (from a market opening of N2.49), that’s like 7.23%. Technically, the stock has just broken a trend channel to the upside.

Continue reading Top Gaining Stocks to Watch This Week, 3rd April

How I Analyse & Pick Profitable Insurance Stocks

How I Analyse Insurance Stocks Using Companies Financial Statement Like Profit or Loss, Balance Sheet (Financial Positions) And Cashflow – Top Financial Ratios to Find Best Insurance Companies In Nigeria

I had a conversation with a friend, this guy loves penny stock so much that he doesn’t trade stocks that sell above N10 per share. Besides, most of the penny stocks he bought early this year have earned him double-digit return.

I always tell him that I love his confidence when it comes to picking penny stock but you know his major concern? His least performing stocks are insurance companies, while the banking stocks are doing well on a year-to-date return basis YTD), the insurance stocks are underperforming compared to the overall sector index.

The insurance sector is up by 9.5% year-to-date which isn’t impressive when compared to the other indices. As of this writing, the NSE insurance sector, after a 5-day fall, is forming a pin bar at the 20 moving average line, a signal that shows the end of a downtrend.

 

The truth is this, Insurance is the most difficult financial products to sell in Nigeria and if you really want to invest in the sector, you need to find companies that are really making consistent profits, highly efficient and are generating healthy cash flow.

How then can one pick good insurance stocks to buy?

My simple guide to picking great insurance stocks to focus on the best-performing company in the sector, the usual way of analysing the strongest sector isn’t applicable as the sector had always been behind its peers for a long time, a reason not to even give it a shot. Take a look at the 5-year performance, 5-9% is low compared to the banking, industrial, healthcare and even the overall market index, so why would you still take the risk of buying stocks in the insurance sector? The only reason is the opportunity to cash out from penny stocks. When you buy into a big cap stock like Zenith bank, a 50k increase might not necessarily make much money compared to the result of a 50K gain on a penny stock. Why? the low price per share of penny stocks make larger volume purchases easy, hence offers better opportunities to cash out faster. Insurance sector offers more penny stocks than others.

Don’t get too excited about this, the same 50k gain on penny stocks that made millions can also wipe out a larger percentage of your portfolio, so it’s advisable to exercise due diligence when trading stocks in the insurance sector.

Follow me as I share proven and experienced trading strategies to uncover profitable insurance stocks to buy in the NSE market.

Find top performers

Unlike the sectoral performance strategy where you start by scouting for the top sectors, analysing insurance stocks doesn’t require the same strategy, we are already aware of the low contribution of the sector to GDP, less than 1%, a simple reason to skip the sector. So, how then should one find top performers? I look for insurance stocks that had appreciated more than the strongest sector index. In my video, “Top Gaining Stocks“, I share the best period to look at when comparing top-performing stocks, this will help you avoid stocks that have increased too much and are about to fade out or stocks whose performance are temporary.

As of this writing, NEM insurance is the top performing insurance stocks. The stock is up by 65.66% year to date.

Check the fundamentals of the selected insurance stocks.

I am a big supporter of fundamental analysis, no matter how fast a stock is moving, if it doesn’t pass my strict financial ratios, I don’t buy. I do this to avoid pump and dump stock; stocks that are only driven by temporary market news.

There are four metrics I use to analyse the performance of an insurance stock.

The first key figure to check which would help you calculate the key ratios for insurance is Net Earned Premium.  When you pay your annual insurance premiums, the proceeds is called Gross Written Premium (GWP). But, what we’re more interested in isn’t the Gross Written Premium but Gross Earned Premium (GEP), which includes the portion of the premiums earned during a financial year. In turn, insurance companies take out insurance themselves. It’s called reinsurance and protects against unusually large risks. Reinsurance costs are deducted from the insurer’s GEP to arrive at Net Premium Income (NPI).

Now that we have sorted out some crucial figures, let’s get cracking on the ratios.

Continue reading How I Analyse & Pick Profitable Insurance Stocks

Top Gaining Stocks to Watch: 26th, March

The NSE All-Share Index and Market Capitalization depreciated by 1.11% and 0.14% to close the week at 41,472.10 and N14.982 trillion respectively.
Similarly, all other indices finished lower during the week with the exception of the NSE CG, NSE
Banking and NSE Pension Indices that appreciated by 1.07%, 3.31% and 1.67% respectively.

We draw our top stocks to watch from the previous week’s top gainers believing that they may sustain their current trend for 5 days.

Zenith Bank

Investors sold the stock despite the impressive the financial result released. Last week, it bounced back from a low of N27.6 to N30.2 representing 9.42%. The stock had just tested its support region (marked yellow) and is already trending upward on increased weekly volume.

Eterna Oil

The stock gained 7.54% last week to close at N6.13. Eternal oil stock had also bounced from the 20-moving average an increased volume. We also expect the momentum to continue this week.

top Nigerian stocks to watch

Would you like to learn how to pick stocks that will rise? click here to order my book.

How To Know When Your Stock Sell-Off Is Over

Best Time To Buy Nigerian Stock After Market Sell-Off – Learn Stock Market Investing Strategies That Tells You When To Hold Your Stock and Buy More.

If you haven’t read my guide on “What to do when your stock continues to fall“, go to this link here to understand how smart investors handle market sell-offs. Unlike a beginner who is emotionally attached to his trade because he doesn’t have a trading system and had picked stocks randomly, an experienced trader with consistent winning strategy don’t take a quick sell decision when they see one of their stocks tank. His equity wasn’t selected out of thin air, they had been subject to historical price performance, fundamental analysis and strength test before they added the company into their portfolio and as such isn’t easily sold-off because the price sank by a certain percentage. This set of traders already know that when profit taking is on it helps them take advantage of emotional traders who out of fear of loss, eventually make good stocks available in the market at a much lower price than what they are valued at.

In the post link above, I also shared practical and actionable steps to take when you see your best performing stock’s price fall sharply like the NSE index in the last one week. As of this writing, most high-cap and fundamentally sound stocks are currently down on a month-to-date basis despite impressive earnings releases and EPS growth. Why? certain investors have already priced the expectations. But now that the seller had created a big bargain opportunity, is it all stocks that are good to buy? absolutely no! The fundamentals of a stock remains a key factor for me. In my book “My Little Secrets That Make Big Money In Stock” I share how to look beyond the market price and focus on the fundamentals of a stock because no matter the direction of the price, it will definitely catch up with the fair value.

One big secret I also discovered in stock is that earnings expectations are more powerful than the earnings itself. When a company financials reveal great numbers across board in the last quarter or previous year, earnings expectations for the next quarter will naturally become high, hence, drive the share prices high as more buyers take position ahead of the release but when the results come out, its natural for the price to sink as the earnings have been factored into the share price.

In stock market, emotion is more powerful than results. Positive sentiments alone can drive a company’s share that trades at N2 to N10 when there is no financial result just like we saw in Japaul Oil and Maritime Services. The $250m capital injection into the oil firm by Milos Global drove the share price from 0.46k to over 0.80k as investors expect the firm to report better numbers in the future. Well, I didn’t buy because I needed to see at least a quarter result before entry. My trading strategy doesn’t push me into any stock, I trade like a sniper and if my setup isn’t complete, I won’t buy.

Back to the sell-off saga, one of my best stocks in the oil sector had tanked by 11% right now and I am even happy not because I love losing money but the new opportunity to buy more. When you do your fundamental analysis well and is confirmed by the company’s recent revenue, profit and cash flow growth, you should always welcome every share price fall as an opportunity to buy more. This company is a top performer in the sector, made loss last two years following the fall in global crude oil price but is staging a great come back as its solidify its gas business and had rebuilt alternative export routes to cushion the effect of re-emergence of militant activities in the Niger Delta while expanding crude oil production beyond pre-crisis level. I had already shared the simple steps I explored to uncover this stock in my book (click here).

Continue reading How To Know When Your Stock Sell-Off Is Over