Analysts advise investors to seek dividend-paying stocks with strong fundamentals.
As positive sentiment continued for the second trading day in the equity market despite volatility in the economy, Lafarge Africa Plc and MTN Nigeria Plc recorded a gain of N78.783 billion or 1.81% during today’s trading.
This was despite the fact that the CBN’s Monetary Committee Tuesday hiked the lending rate (MPR) by 100 basis points to 16.5%.
Breakdown of the gains: Checked showed that the shares of Lafarge Africa Plc increased from N20.00 per share the previous day to N22.00 per share at the close of the day’s trading, representing a growth of 5.26% or N17.719 billion in market value.
Also, MTN Nigeria shares rose to N200 per share or N4.071 trillion in market capitalization after the day’s trading from N197 per share or N4.009 trillion the previous day, hence has added N61.063 billion or 1.52% to the market capitalization.
Strong fundamentals stocks: According to market analysts, there is certainly an impact on the equities as a result of higher interest rates but there’s still money to be made if investors are in the right sectors. That means looking at some of the sectors that have been the best-performing despite the fact that the economy is struggling.
According to chat with some investment analysts, dividend-paying stocks with strong fundamentals are expected to do well given their half-year performance, which has been decent.
They noted that the fact that the share prices of the companies quoted in this sector are dropping makes it more attractive, hence this is the time for investors to accumulate the stocks to reap capital gains and bigger dividends as the economy adjusts.
Kasimu Garba Kurfi, chief executive officer and managing director, APT Securities and Funds Limited, while advising investors said:
- “When interest rates are high such as this time, invest in stocks that give double-digit dividend yields such as GTCO, Zenith, UCAP, and also the stocks that have double-digit earning yields such as WAPCO, Fidelity Bank, Transcorp, Dangote Cement, Dangote Sugar, Vitafoam, Fidson, BUA Foods, Nigeria Flour Mills, Presco and also stocks whose prices are below 52 weeks low, such as UBA, Access Holdings, GTCO, Transcorp, AIICO and AXA-Mansard”.