BREAKING: Nigerian Breweries To Payout 100% Of Profits As Dividends

Nigeria’s largest brewer, Nigerian Breweries plans to pay out about 100% of Nigerian Breweries 2021 full-year profits as dividends, BrandNewsDay gathers.

Brand News Day Nigeria reports that Nigerian Breweries made this disclosure contained in the latest dividend announcement last week.

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Nigerian Breweries To Payout 100% Of Profits As Dividends

The company is however only going to pay about N9.6 billion on April 22nd this year if it is approved by its shareholders. This is because it had already paid out N3.2 billion in interim dividends back in October.

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What is wrong with the Nigerian Breweries’ 100% Payout Of Profits As Dividends?

It is not often that a company pays out its full-year profits as dividends due to the need to retain some cash for investment purposes.

Meanwhile, the reverse is the case for the Nigerian Breweries, as the country’s largest brewer is jeering up to payouts 100% of its profits as dividends.

• Incidentally, Nigerian Breweries PLC is one of the very few stocks that has had a recent history of paying out all of its profits as dividends.
• The company achieved a 153%, 116% and 191% dividend payouts ratio for the years 2018, 2019, and 2020 respectively.
• With the N12.9 billion in dividends paid out in 2021, Nigeria Breweries has now paid out about N75.3 billion out of profits of N55.5 billion in that period.

READ: Nigerian Breweries Reports 39.1% Rise in Profit to ₦7.7Bn in Q1 2020

Despite the huge dividend payout, Nigerian Breweries still has one of the lowest returns on average equity in the industry posting 4.5% and 7.6% in 2020 and 2021 respectively. A major factor for this is also the high level of retained earnings held by the company.

Nigerian Breweries has about N90 billion in retained earnings and another N77.4 billion in share premium taking its total shareholder’s equity to N171.8 billion.

However, most of the equity is locked up in property plants and equipment which the company is not sweating enough to generate the right returns. This is buttressed by a return on assets of just 2.7% in 2021.

Is Nigeria Breweries a buy?