₦airaland Forum

IYGEAL:
The current prices don't show the true reflection for a portfolio that has been active for years. During those years, there must have been price fluctuations at which points the investor is expected to balance his portfolio.

I don't have a lot of units of Zenith, for example, but my average price is about N15. I had bought at 11 in 2020 and sold some; then bought more below 20.

My average price for ZENITH is N23.5 because I added it to my portfolio last year and it is about 3% of my portfolio

My average price for UBA is N4.98 and it is about 25% of my portfolio. Waiting for their meeting tomorrow 14th Feb.

emmanuelewumi:
Get enough books to read on dividend investing, 7.5% is too low in the Nigerian market.

I looked through Stanbic IBTC Funds factsheet https://www.stanbicibtcassetmanagement.com/static_file/Nigeria/nigeriaassetmanagement/SIAML/FileDownloads/PDF%20Files/SIAML_Consolidated_Fact_Sheet_Dec2021.pdf

Their Equity Fund that invests about 73% in Equities and 27% in Fixed income. Their 5 year performance which includes dividends and capital appreciation at the end of 2021 was 44%. That tells me a 7.5% return for anyone's portfolio based on dividends and coupons only is not too low in the Nigerian market.

Will build a table of Average stock price vs dividend for a couple of stocks to cross check what performance on an individual stock basis for 2021 was.

emmanuelewumi:
Get enough books to read on dividend investing, 7.5% is too low in the Nigerian market.

Using current market values I think a portfolio return of 6% is fair or average. And one of 9% and above income yield is excellent. Especially if the portfolio also grows in valuation in trend with inflation.

emmanuelewumi:
I use yield on cost, one of the reason why I average down good stocks.

I love buying stocks at cheap prices especially in a down market. So I am a yield hunter

I am more concerned about the cash flow from the portfolio through diversification and reinvesting for a better yield.


If you have been using dollar cost averaging over the years your average price for Zenith should be less than N19, Dangote cement should be less than N190, United Capital should be less than N2.50k etc.


N5 million invested in Vitafoam in 2020, will give you a dividend of about 450k in 2020, dividend of 630k in 2021 and a dividend of N1.35 million in 2022.

The Vitafoam shares that will give this dividend is 1 million units currently valued at N24 million.

As a yield hunter, selling half of the shares will give me a dividend of 675k. The fund realized from the sale will be diversified in a FGN bond at 13% to earn a coupon of N1.56 million. When added to the 675k, I will get a total of N2.23 million from this diversification or portfolio rebalancing.

Part of this dividend will be used to repurchase more of Vitafoam shares after dividend payments.

Fixed income Investment are not as volatile as equities, they can also be used to get more shares in the company based on the future prospect of the business .

Even when I do dividend yield based on cost I get about 7.5% for 2021 dividend income after taking out impaired investments. That is I am getting 7.5% after taking out Impaired investments like International Energy Insurance, STARCOMMS, SKYEBANK. Can claim to afford taking them out since my current portfolio value is nearly double my cost value for all stocks i have purchased including the ones that have gone bad that have turned to zero value like SKYEBANK. That is looking at Equity alone. If I factor in bonds I get about 9%

But using current market values I think a portfolio return of 6% is fair or average. And one of 9% and above income yield is excellent. Especially is the portfolio also grows in valuation in trend with inflation.

emmanuelewumi:
Not too high oooo

That portfolio will only have the likes of Zenith. And cannot add any other stock on the NSE as most of them have dividend yields less than 11.5%

emmanuelewumi:
No big deal, just replicate what you did with your portfolio for your brother. He needs to sell some of the dead stocks in his portfolio and reduce the stocks to about 30.


He should have two Stockbroking accounts, one will be for long term Investment this should be worth about 70% of his portfolio, the other account should be for trading.


What is the current dividend generated by his portfolio? He should endeavour to invest part of his dividends in fixed income funds.


What will he do if the market is very bearish when his children are about to be admitted to the University, will he sell in a down market?

Reason why he needs funds that won't be affected by the market conditions.



If I may ask, what is the current dividend produced by your portfolio? if it it less than N12 million you need to rebalance your portfolio for a better yield

Is a target of N12 million dividend from a portfolio of N104 million not too high. That is an average dividend (& Coupon) income yield of 11.5% ?

I think an aggressive portfolio should aim for about 9%. While an average portfolio should aim for about 6%.

I will appreciate your views and that of everyone. Looks like i am doing less than 6%.

moneymanager:
So we are going to be alright after all.
Our kids will be fine
https://www.pwc.com/gx/en/research-insights/economy/the-world-in-2050.html

If you divide the GDP by population I guess Nigeria will continue to rank poorly as we move towards 2050. That means we should be striving for a higher GDP than these.

GANDALF1:
I bought this UBA I sold today in Jan 2021. Same sentiments.

In the end, profit was great but what happened? Elumelu did his magic and the price dropped to N6.80 from above N8 in one day, less than 1 month after I bought. Took 1 full year to get the break even price/quantity to dispose them today.

Anyway, plan your trade, Trade your plan

PS: I will never touch any Elumelu's company again in a bull market

But the way he champions entrepreneurship in Africa makes him look responsible. Perhaps he takes too much risk like a cowboy. I have UBA and Transcorp managed by him

GANDALF1:
Thats a good strategy you have there. and you are correct about me not buying anything at the moment. Instead I exited my UBA position today and I am now 100% in cash.

NSE has exceeded its known resistance and is beginning to show weakness in volumes. Dont forget that it is local liquidity that is driving the markets now. So I need people like you to buy and hold.

Once the fuel dries, the prices will drop back and I will buy low while you will be trapped and might stay trapped because it might take you one year to bail.

Exited some FBNH positions at N12 and bought more UBA at N8.20 to 8.30 betting on EPS above N3 in 2020 and beyond with a dividend total of N1.0 yearly from UBA. Plus the book value of UBA continuing to grow above N21. But with the change of UBA board meeting from last week Tuesday to mid February perhaps UBA 2020 results is bad.

onegentleguy:
He probably thinks he's been CAUTIOUS but unknown to him, he is been UNDULY PESSIMISTIC.
He needs to have a BALANCED VIEW of things.

Some stocks will rise and some will fall.
The KEY is to "continually work to be on the right side of the divide".
The mkt will time again experience varying degrees of pullback, but folks should not expect a major bear in the near term.

Selah

In line with some of your thoughts.

I think the pre elections sag (sell-off) may not play out this year for a couple of reasons.

*Oil prices may remain high. NSE does well with high oil prices.
*Many stocks are currently under priced with excellent PE's, dividend yields and growth prospects. Hence many value investors will hold on to their stocks and likely continue to buy more as dividend yields are as good or better than money markets on a short to medium to long term basis in varying degrees.
*A lot of FPI'S have already exited and CBN cleared a lot of their outstanding repatriation last year. Hence the gas for crazy sell downs is reduced.
*The new capital gains tax on equities on gains above N100m leaving the NSE may dampen appetite of FPI'S for jijo. This may reduce volatility of prices on the NSE.
*Current CBN monetary policy aims to curtail inflation and ballooning of cost of government borrowing via development economics approach and will most likely not increase interest rates this year.
*Many International stocks (US) currently overpriced and may likely withness negative returns this year.

We may not have a major sell off this year if the following points continue to stand. But there will be room to increase returns above inflation through careful stock picks this year.

emmanuelewumi:
We still have 3 more MPC meetings in 2022.

My base forecast is a hold on rates for the remaining 3.

What do you forecast ?

Mpeace:
Oil prices got to $90 today. Highest since 2014. Hmmmm

Coupled with the CBN monetary policy of not increasing interest rates there is hope NSE will not pull back this year.

onegentleguy:
Pls read through the post below...

No thanks to the policies of the Central Bank of Nigeria, the Nigerian fixed income market now operates in four segments – the NTB market, the bond market, the money market, and the OMO market. Each market has its different pattern and the direction of yields across these markets are not the same.

To start with, the local debt stock is about N35trn. Using an assumption of a 10% cost of debt, that’s like N3.50trn spent on servicing local debt. By the time you add external debts, the entire revenue generated by the FG is nearly gone (as we see in reality). Therefore, we should all be clear that for as long as this CBN is there and this administration is still in charge, we should abandon the idea of high yields. To avoid high cost of debts for the FG, the CBN will continue to implement policies to keep interest rates low.

It is for this reason that yields in the Nigerian treasury bills market and bonds market will not materially move past current levels. Yields in the NTBs market will likely be within 5% - 7% band in 2022. In the FGN bonds market, yields (on 10-year) would likely be within 12% - 14%.

Some would say that the estimated government expenditure and fiscal deficit could drive yields upwards. While this should be true in an ideal situation, that will not be the case in Nigeria. This is because the CBN has now gone deep in monetising the FG’s debts. And no, it is not exactly printing money for the FG (if it was, the inflationary pressure we have today will totally go out of hand). The question now is, ‘where does the CBN get the money to support FG excessive spending (a very terrible economic bad behaviour)’?
The answer is in the CRR deposits. On the surface, the CBN is telling the markets that it is pro-growth (they will harp on this again tomorrow after their meeting). Meanwhile, their unorthodox approaches have resulted in excessive CRR debits from banks’ deposits. They will take those monies from banks at 0% and lend to the FG at 9%. This transaction benefits both the FG and CBN (the CBN earns over 900bps spread, clean!).

Meanwhile the banks are the ones at the receiving end. These excessive CRR debits have resulted in liquidity crunch for banks. To stay afloat, banks have been offering high yields to shore up deposits. Mutual funds and even PFAs have been putting funds in bank placements. By implication, banks are faced with rising cost of funds. In summary, the money market yields are most likely going to be high in 2022. I see money market yields trading within the bands of 10% - 12%.

#Copied

MPC holds all policy parameters. Excellent outcome just read out live by CBN governor.

As the big banks meet next week, CBN should expedite approving their results.

emmanuelewumi:
They might i have to dip hands into their reserves in order to pay the dividend paid last year if their earnings cant support a final dividend of N2.70k.


Dividend cut is a red flag and the company will be futher punished by the market, i dont think GTB will want that

All things being equal last year's dividend with be retained by all means

Going by their YTD at Q3 they have EPS above N3 and a loss in Q4 is very unlikely. Hence they will not need to dip into reserves to pay a final Dividend of N2.7. The only issue is dividends are always subject to approval of CBN. I don't know how the CBN approval works. I know in past they have limited how much Dividend can be paid for various prudential reasons.

emmasoft:
They can only pay what their earnings support. If the earnings come out fine they will do as usual otherwise they have to stay within their earnings and more so the regulators are their to checkmate them.

Based on their Q3 results their EPS will likely drop from about N7 to about N5 in 2021 full year. Even if it drops to N4 will CBN stop them from paying total dividend of N3. As the drop is most most likely temporary.

emmanuelewumi:
Foreign Investors and pension fund managers

Interesting. Foreign investors have left many Nigerian banks. If they are pulling out much from GTCO for now, it will pull the price down significantly.

One was able to see percent holdings of foreign investors on FT website freely before. Where can one see such info freely this days ?.

Zegra:
Yes

Interesting. More than a decade ago.

dharpzee:
,

Guessing between, 10k or 20k dividend

If they pay up to 10k that will be great. They like 1k to 3k dividends

Based on Transcorp Q1, Q2 and Q3 results that showed increased income to shareholders I estimate the following full year numbers for Transcorp for full year 2021

Total comprehensive income of N 17.5 billion
That attributed to Shareholders = N 9.3 b
That to Non Controlling Interest = N 8.2 b
Giving EPS for Shareholders of 23 Kobo. How much of this will be paid to Shareholders as dividend is a big question and will contribute to determining if the price will continue to go up or fall back.

Not extraordinarily strong results. But positive change in direction.

Valueinvestor:
My brother Gain is gain, 10% of 100k is 10k, 10% of 100M is 10M, depends on what you're looking at. Am Just happy for those in the bus

I pray they start paying a sizeable and increasing dividends as a policy. That is the only way to grow (The GTB and ZENITH way)

I pray Transcorp gives at least 5 kobo dividend this year if not 10 kobo.

The only way they can grow is to have a good dividend policy of about 50% of shareholder earnings to be paid as dividends yearly.

kolaish:
for loco & others who are interested

Best Penny Stocks to Buy in Nigeria in 2022 - Buy Transcorp Shares Now


https://www.youtube.com/watch?v=Ib1SLsfRjyY&list=LL&index=1&t=151s

Excellent video analysis.

wanaj0:
Otedola did not buy at 8-9 Naira. He bought at a much higher price I think

FBN is currently over priced though.

Eku market o

FBNH is currently under priced. It's only relatively over priced when compared to the other massively under priced bank stocks.

DeRuggedProf:
https://www.proshareng.com/news/People/Governance-Issues-in-FBNH--Remi-Babalola/60507

The governance issues more than what he can handle. Okay o.

DeRuggedProf:
We go borrow money equivalent or more to our investment in a once powerful, but now feeble animal and invest in a chromatographic sibling. This means we have two investments with the same cash.
Pump the feeble animal to look healthy, sell parts at bubbled prices, then offset our debts. Las las, na late comers go technically pay our debts .

Interesting scenario. Can see many potential permutations (scenarios). Will be interesting to see which one will play out (especially the bubble) to profit the watchful ones in the bus.

BabsO2:
He raced on to accumulate more aggressively despite the apparently bad audited Q3 bottom line incomes. Singlehandedly pushing the price up against the sell pressure from some shareholders.

What is pushing Ote$, is it in the interest of common shareholders And or what is he seeing that those selling are not seeing

https://www.thisdaylive.com/index.php/2021/12/16/otedola-i-have-no-interest-in-holding-any-board-position-in-fbn-holdings-first-bank/

Ote$ says he is simply taking position in FBNH that he sees as a very good investment. Interesting.

yMcy56:
FBNH
200M additional units @11.52 Av. Price.
Whosoever have Ote$'s number should tell him to come see his fan oh.

https://doclib.ngxgroup.com/Financial_NewsDocs/65_Notification_of_Insider_Dealing_-_Mr._Otedola.pdf

He raced on to accumulate more aggressively despite the apparently bad audited Q3 bottom line incomes. Singlehandedly pushing the price up against the sell pressure from some shareholders.

What is pushing Ote$, is it in the interest of common shareholders And or what is he seeing that those selling are not seeing

PETERiCHY:
SHARPEN your CUTLASS for SANTA CLAUS RALLY

Venue = NSE

Date = 23rd & 24th Dec 2021

Time = 9.30am to 12pm

BARGAIN HUNTERS TAKE NOTE!

And fat Santa Claus 1 (or 2) sales is expected in the next six trading days on a few stocks. Get your money ready to buy with very short notice of the sale event.

Is Ote$$ still mopping FBNH

emmanuelewumi:
Better to chill and buy on the floor

MTN has a P/B of 18.3. Oops original promoters of MTN must be making and taking a hefty profit. The PE of 12x and DY of 6.3% not too attractive in the current market.

emmanuelewumi:
It is an offer for sale

Fingers crossed will MTN fall below the offer for sale price tomorrow.