This represents the interest on your investment after a year. In 2007,First Bank Nigeria gave a dividend of N1,Zenith Bank gave a dividend of N1, while Flour Mill Nigeria gave a dividend of 90k.
For example, as Zenith Bank declares a dividend per share of N1, it means you are entitled to N10, 000 if you own 10,000 units of Zenith Bank shares. The N10, 000 will be posted to you as a dividend warrant (net of withholding tax).
I read the story of a man who got a dividend of four million naira from the dividend paid out by First Bank Nigeria in the year 2006.This man had four million units of First Bank shares as at 2005 when the man retired. All his working years, he did not invest in another stock but First Bank shares and Union Bank shares. In the year 2006 when First Bank Nigeria gave a bonus of one for one (1:1) that is for every one share you have they give you another one. The total shares the man has was doubled to 8million units. First Bank also declared a dividend of N1 per share, so the old man went home with N4, million dividends. No matter where you are now, financially, you can make it through the Nigerian stock market. You can build your wealth through the market.
These are extra shares fully paid out of company’s reserves for existing investors in proportion to their existing holding in the company.
BONUS HISTORY OF FIRST BANK NIGERIA
Year – shares owned – bonus ratio – free shares – new shares
1992 10,000 units – – 10,000 units
1993 10,000 units 1 for 3 3,333 13,333 units
1994 13,333 units 1 for 1 13,333 26,666 units
1995 26,666 units 1 for 4 6,666 33,332 units
1996 33,332 units 1 for 4 8,333 41,665 units
1997 – – – –
1998 41,665 units 1 for 4 10,416 52,081 units
1999 52,081 units 1 for 4 13,020 65,101 units
2000 65,101 units 1 for 4 16,275 81,376 units
2001 81,376 units 1 for 4 20,344 101,720 units
2002 101,720 units 1 for 4 25,430 127,150 units
2003 127,150 units 1 for 5 25,430 152,580 units
2004 152,580 units 1 for 8 19,072 171,652 units
2005 171,652 units 1 for 6 28,608 200,260 units
2006 200,260 units 1 for 1 200,260 400,520 units
In 1992 the shares of First Bank was N2.If you had invested twenty thousand naira (N20,00) in 1992 to buy 10,000 units looking at the bonus history till date shows that it will be worth over twenty-eight million naira as at march,2006 when First Bank shares was sold for N72. In addition, the bonus history shows that the 10,000 units of First Bank shares bought in 1992 have increased to 400,520 units. What a great compounding!
You enjoy capital appreciation as the market price of the shares bought increases. In the last two years, the prices of stocks on the floor of the Nigeria stock exchange have witnessed tremendous growth. In 1992, First Bank was N2 and in the first quarter of 2006, it moved to N72.What great increase. Japaul oil & Maritime was 0.99k in December 2006 and by October 2007, it rose to N6.02k.
Price Movement Analysis for 5 years
2003 – 2007
R.T. brisco N2.8 N32
G T Bank N5.2 N36.19
U A C N N4.1 N40.19
Glaxo -Smith -Kline N3.3 N23
Nestle Nigeria shares was sold for N76 as at march 2003 and the highest price in 2006 was N254.1 which means 10,000 units of Nestle shares in March 2003 at N76 per unit will be worth N760, 000.If you now decide to sell off when the price was N254.1 in 2006, you will be selling for N2, 541,000.That is, 10,000 x N254.1 =N2, 541,000.You are already a millionaire. Don’t forget that you only invested N760, 000 in buying the shares. You are now making a gain of over N1.7 million naira. What a smart way to make money and have your money work for you.
Collateral for loan
Your shares can be used as collateral to obtain loan from the bank. Should you need loan for capital project or to expand your business, your shares might just be all you need to get through the pain of endless search for money.
Protect your money from inflation
Your investment in the stock market is a means of protecting your money from the ravages of inflation. Your money can keep working for you without depreciating in value.