Dangote Cement’s 2024 N30 dividend: Will it reignite another share price rally?Â

Investors hoping for a bigger payday from Dangote Cement’s 2024 earnings just got a reality check: the dividend remains stuck at N30 per share, unchanged from 2023.

At first glance, this signals stability after all, the company delivered a 10.46% jump in post-tax profit to N503.25 billion and a 62.16% surge in revenue to N3.58 trillion, backed by strong retained earnings of N1.027 trillion.

But for investors who watched Dangote Cement’s stock soar 115% in Q1 2024, only to see a sluggish 0.25% YtD return as of February 2025, the real question is: Will this dividend reignite another rally in Q1 2025 and beyond?Â

How does it stack up?Â

Dangote Cement’s 100.58% payout ratio, down slightly from 110.31% in 2023, shows its commitment to shareholders. But in a highly competitive landscape, its 6.25% dividend yield looks uninspiring.

• BUA Cement increased its dividend by 2.05% to N2.05 for 2024, while its payout ratio declined slightly from 95.28% to 91.78%. With a dividend yield of 2.15% and total return of 2.15% by February 2025, the company opted for a cautious increase despite market pressures.
• Lafarge WAPCO took a drastic approach, slashing its dividend by 37% to N1.20, with its payout ratio plunging to 19.3%. Yet, despite the cut, it delivered a dividend yield of 2.53% and a 10.45% total return, outperforming BUA Cement and Dangote Cement.

For income-focused investors, Dangote Cement’s 6.25% dividend yield and 6.20% earnings yield pale in comparison to Nigeria’s 10-year FGN bond yield, now exceeding 18.8%.

This raises a fundamental question: why take on equity risk for less than half the risk-free return? Â

The sharp rise in interest rates has made fixed-income investments more attractive, putting pressure on equities.

While Dangote Cement remains a dominant player, it faces challenges that may have influenced its decision.

Debt, FX pressure, and market sentiment

Rather than aggressively increasing payouts, Dangote Cement’s decision likely reflects its mounting financial pressures.

Rising finance costs soared 125% to N700.3 billion, driven by:

• Interest expenses surging 210% to N448 billion.
• Foreign exchange losses increasing 52% to N249 billion.
• The net debt grew by 286% to N2.18 trillion.
• Interest coverage ratio declined to 2.57x from 5.08x in 2023.

This growing leverage may have forced management into a more conservative dividend policy, prioritizing stability over an aggressive payout hike.

Will this reignite a share price rally?Â

Dividends alone do not drive stock rallies. Investors aren’t just looking for payouts; they want confidence in a company’s growth trajectory and financial stability.

Dangote Cement remains the dominant player in Nigeria’s cement industry, with the strongest revenue, profitability, and market share.

Despite this, rising debt, exposure to FX volatility, and a shrinking interest coverage ratio, could dampen bullish sentiment.

However, from a valuation standpoint, Dangote Cement appears attractively priced.

• Its price-to-book ratio of 3.71 is lower than the three companies’ average of 4.70, while its price-to-sales ratio of 2.26 is below the 2.49 average.
• Additionally, its price-to-earnings ratio of 17.90 undercuts the average of 24.21, suggesting that its stock is not overvalued compared to its peers.

That said, another important key question is whether investors see this 100.58% payout ratio as a sign of resilience or a potential strain on future earnings.

If investors recognize this undervaluation and see the payout as a sign of resilience, sentiment could shift, driving renewed interest in the stock and potentially pushing it higher.

For income-focused investors, the 6.25% dividend yield may offer little reassurance. However, with 10-year FGN bond yields of 18.8%, Dangote Cement’s payout remains less attractive compared to risk-free alternatives, which could limit demand from yield-seeking investors.

In a high-interest, inflation-driven environment, the real test is not just dividend consistency; it’s whether Dangote Cement can sustain capital gains to offset muted income returns.

Without a renewed growth catalyst, this could be the moment when investor sentiment starts tilting from optimism to skepticism.

Will N30 per share be enough to reignite another rally? The coming months will tell.