Omolabake Fasogbon
A stock investor recently went viral after revealing a meager dividend payout on shares he claimed to have bought 18 years ago.
According to the unidentified man, he had invested N20,000 in a bank’s stock for close to two decades and literally forgot about it, until the frenzy around the Dangote Refinery Initial Public Offering (IPO) jolted his memory.
But a meagre return of N5,332 after all those years left him stunned, as it did many others, who left discontented remarks following his revelation.
One Chukwuebuka Simayann commented: “Make una dey buy shares, make we dey buy animals and land. Imagine how many goats that your 20k for multiply for you.”
Another, Adeyemi Ayodele Victor, wrote: “Y’all still don’t know say na millionaires and billionaires they gain from this thing. All your small thousands na off grid oo. Ask me make I download give u. Even though I was oblivious and naive then. But now knowledge is power.”
Overall, the flood of dissenting reactions revealed skepticism and indifference in some quarters regarding shares, same with resistance among a section of the public toward to Dangote refinery IPO.
Like any investment, share investment is not all smooth sailing. It responds to market fluctuations, which can bring periods of growth and downturns.
The very reason experts repeatedly caution investors against sleeping on their shares, a mistake that likely explains the investor’s minimal gains.
Notable investor and CEO of Berkshire Hathaway, Warren Buffett, once declared, “Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.”
By the way, shares investment also carries reward beyond routine dividend payouts. Ownership offers multiple avenues for value creation that can serve investors’ needs at different times. In addition to potential capital appreciation, shareholders of listed companies stand to receive bonus shares, additional stock issued free based on existing holdings which increases an investor’s total shareholding without any extra cash outlay. Nigerian Aviation Handling Company (NAHCO), for instance, recently approved a bonus issue of one new share for every seven held.
Shareholders are also entitled to participate in rights issues, discounted new shares offered to existing investors when a company raises fresh capital, as seen in Eterna Plc’s recent N21.52 billion rights issue.
While these benefits are inherent, tapping them requires staying alert, as Buffett’s warning suggests.
Likewise, the Securities and Exchange Commission (SEC) has repeatedly urged investors to always stay informed and adapt their investment strategy to changing circumstances.
The SEC’s advice is important to note considering that corporate fundamentals, including business models, management teams, competitive landscapes, dividend policies, and broader macroeconomic factors are constantly evolving.
To stay on the safer side with stocks, SEC advises that “investors should conduct research into the fundamentals and financial performance of securities, understand industry trends and seek professional guidance where necessary.”
Meanwhile, there is no evidence that the aggrieved investor referenced earlier followed this advice.
Investment strategist, Iking Ferry echoed the need for constant monitoring of one’s investments to avoid falling victim. “When you buy a company’s shares, you must follow the business, its financial results, management, industry, competitors, dividends and corporate actions. Most importantly, keep checking whether the reason you bought the stock still exists.
“Don’t marry a stock. You are investing in a company, you are not getting married to it. Investors must know why they are buying, at what price, what they expect, how long they intend to hold, and what would make them sell,” he advised.
For investors who like the disgruntled man, have not checked on their holdings in years, there is far more to review than just dividend payouts.
Top of the list should be the shares’ current value, dividends paid and any unclaimed, ensuring personal details are up to date, and, above all, reviewing investment purpose against current financial goals.