Why many Nigerian companies are skipping dividends

At least 60 out of about 136 companies on the Nigerian Exchange (NGX) have not paid dividends for at least three years, from 2021 to 2025, according to findings by PREMIUM TIMES.

This is an increase from 51 companies during the previous five years when there were 156 quoted stocks, including ETFs. The data highlights that many Nigerian companies do not pay dividends for several reasons, including strategic and regulatory issues.

Some companies choosing not to pay dividends is not always a negative sign. It doesn't mean they are breaking any rules that regulators should punish. There is no law in Nigeria that forces companies to pay dividends to their investors.

Several companies like Austin Laz, Cadbury, Caverton, Chams, Chellarams, Daar Communications, Dangote Sugar, Critical Minerals Financing Corporation (formerly Deep Capital), Ellah Lakes, Nigerian Enamelware, Eterna, ETranzact, Eunisell, Fortis Global, FTN Cocoa, Golden Guinea Breweries, Unity Bank, and Guinness have not paid dividends regularly due to negative retained earnings for years.

International Breweries, Japaul Gold, Juli, Livestock Feeds, Mutual Benefits, Morison Industries, Multi-Trex, Nigerian Breweries, NCR Nigeria, Neimeth, Nestle, NSL Tech, Oando, Omatek, Premier Paints, PZ Cussons, Royal Exchange, RT Briscoe, SCOA, Tantalisers, Thomas Wyatt, Union Dicon, Universal Insurance, UPDC, Veritas Kapital, and Coronation Insurance also fall into this category.

Some companies like African Alliance, Afromedia, Ekocorp, Pharma Deko, and STACO Insurance have not issued their audited accounts since at least 2022. Because of this, they cannot announce dividends.

Others, including Briclinks Africa, Champion Breweries, Honeywell Flour, Ronchess Global Resources, and John Holt, along with underwriters like Lasaco Assurance, Prestige Assurance, Regency Alliance, and Sovereign Trust Insurance, are choosing to reinvest their profits instead of paying dividends.

Companies typically pay dividends from retained earnings, which are the profits they have saved over time. In this review, companies like Aradel Holdings, Transcorp Power, Haldane McCall, VFD Group, Mecure Industries, Legend Internet, and Zichis Agro Allied Industries were not included because they became public companies from 2023 onward and are too new to have a consistent dividend history.

The list does not include exchange-traded funds (ETFs) or new listings that did not offer dividends for at least three years.

Major Challenges

The fact that many public companies in Nigeria did not share cash dividends with shareholders over five years does not mean they ignore dividend payments. Data shows that the main reason for not paying dividends is losses.

Only nine companies that did not pay dividends at all or consistently from 2021 to 2025 made profits during that time. These companies are Briclinks Africa, Champion Breweries, Honeywell Flour Mills, John Holt, Lasaco Assurance, Prestige Assurance, Regency Alliance, Ronchess Global Resources, and Sovereign Trust Insurance.

This situation is similar to the previous five years when only five companies did not pay dividends. Nigerian corporate law does not allow public companies to pay dividends if they report losses. The law believes companies should focus on recovering before rewarding shareholders.

“A company may, in a general meeting, declare dividends in respect of any year or other period only on the recommendation of the directors. The company may, from time to time, pay to the members such interim dividends as appear to the directors to be justified by the profits of the company,” says Section 426, Subsections 1-2 of CAMA 2020, the legal framework for businesses in Nigeria.

“Subject to the provisions of this Act, dividends are payable to the shareholders only out of the distributable profits of the company,” it adds.

The foreign exchange reforms introduced by President Bola Tinubu, especially the naira devaluation from June 2023 to February 2024, caused huge losses for many businesses that rely on imports and have foreign currency exposure.

For companies like MTN Nigeria, Nigerian Breweries, Guinness, PZ Cussons, Nestle, and Cadbury, the impact was severe. Some big companies like GSK and Procter & Gamble even had to leave the country.

The financial issues that followed led to losses in many sectors outside financial services, turning retained earnings into deficits and affecting companies' ability to pay dividends.

“Not until 2025 did we see that companies started to find their footing back, with the exchange rate now more stable,” said Oyindamola Oyenuga, an investment research analyst at Meristem Securities.

She explained that a company not paying dividends for some time requires understanding why that is the case, noting companies like Unilever and UACN paid dividends before the foreign exchange crisis began.

“There were lots of sell-offs on consumer goods stocks; they were hard hit. Many investors took their profits. They sold off consumer goods stocks. But now, we are seeing that (dividend payment) return,” she said.

Yet, economic challenges are not the only barriers to companies paying dividends. Regulations can also complicate things.

This was seen when the Central Bank of Nigeria (CBN) ordered banks in June 2025 to stop paying dividends if they had forbearance loans until they cleared their balance sheets of bad debts.

Major banks like Access Holdings, First HoldCo, United Bank for Africa, and mid-tier lender Fidelity Bank ended the year without paying dividends, breaking a long-standing tradition.

Amid this regulatory pressure and the disappointment of shareholders expecting dividends for 2025, Access Holdings chairman, Aigboje Aig-Imoukhuede, reassured shareholders last month at the annual general meeting.

The banking group, Nigeria’s largest by assets, reported a revenue of N5.5 trillion and increased total assets by nearly 25 percent to N51.6 trillion in the last financial year. Their pre-tax profit also exceeded N1 trillion, making them one of only three banks to achieve this.

“Without a doubt, those results do not speak to an institution that cannot pay a dividend. Of course, we can pay a dividend,” Aig-Imoukhuede told shareholders.

“It implies that we were restricted from sharing dividends with our shareholders for specific reasons,” he added.

One reason was still having forbearance loans in their portfolio during the year.

New issues have come up beyond the need to comply with forbearance loan rules for banks that want to pay dividends.

Now, in line with international best practices, the CBN wants banks to limit their investment in subsidiaries to 10 percent or less of shareholders’ funds.

Until banks enforce this rule, paying dividends is not an option, according to the CBN.

This is particularly difficult for bank holding companies like Access Holdings, which have aggressively expanded into areas like payments, pensions, and consumer lending in recent years.

Corporate Culture

Across the world, companies focused on growth often do not prioritize immediate shareholder value, which is usually tied to regular cash distributions.

These companies prefer to invest most, if not all, of their profits back into their operations. For them, growth is a top priority, and waiting for returns is often a virtue that investors must accept.

This is especially true for tech companies, which tend to be capital-intensive.

The need for growth requires them to invest heavily in building essential infrastructure and keeping up with fast-changing trends and consumer preferences.

For this reason, US tech giants like Amazon, Twitter, Netflix, and Tesla do not pay dividends.

Companies with a residual dividend policy focus on growth and tend to prioritize capital expenditures over paying dividends.

In this category is Access Holdings, which has used most of its retained earnings for significant expansion across Africa, branching out beyond core banking into other promising sectors.

Investors often view growth stocks as having potential for capital appreciation, which can make up for the lack of dividend payments.

The NGX has created a special listing segment called the Growth Board for companies with smaller market capitalisation that show promise for growth, especially for tech firms and SMEs across various sectors.

Growth stocks often appear expensive based on their price-to-earnings (PE) ratio, which compares a company’s share price to its earnings per share. This gives an idea of how much investors pay for every naira of profit a company makes.

“I think I said at the last AGM, ‘shareholders who don’t have the time to wait for dividends, this is not the company for you,’” said Chuka Mordi, CEO of Lagos-listed agro-processor Ellah Lakes, in February.

He was stressing his company’s focus on growth over shareholder value to save enough cash for the current expansion phase and recover from years of losses.

Whether through dividends or capital appreciation, a stock must offer some return to make it attractive for investors.

“If a company takes up a strategy that they want to expand, for example Access Bank or UACN acquiring CHI, that shows the prospect of growth and wider market reach,” Ms Oyenuga said regarding whether stocks that don’t pay dividends can still appreciate in value.

She believes the growth of such companies will eventually lead to increased sales and profitability.

Investors pay attention to growth plans within the company, which can affect stock prices positively, she added.