The Nigerian stock market has experienced a sharp decline in recent weeks, leaving many investors concerned about the value of their portfolios. During the sell-off, the Nigerian All-Share Index fell by more than 8% in a single month, wiping out approximately ₦13.29 trillion from the market value of listed companies.
Despite this decline, the market has still gained more than 47% during the year, suggesting that the recent drop may be a correction rather than the beginning of a prolonged bear market.
One important effect of falling share prices is that dividend yields become more attractive. However, a higher dividend yield does not always mean a better investment. Sometimes it reflects a weakening business rather than a genuine opportunity.
This raises an important question: Which Nigerian dividend stocks are still financially strong enough to continue rewarding shareholders?
Why a Falling Share Price Can Increase Dividend Yield
Dividend yield is calculated by comparing the annual dividend paid with the current share price.
For example, GTCO paid shareholders ₦12.76 per share for the 2025 financial year. When the stock traded around ₦122 per share, the dividend yield was approximately 10.5%.
After the share price dropped to about ₦117, the same dividend resulted in a yield close to 11%.
Nothing changed about the dividend payment. The only difference was the lower share price.
This explains why experienced dividend investors do not always fear falling prices. Sometimes they provide an opportunity to buy quality businesses at more attractive valuations.
However, investors should also be careful of a dividend trap, where a rising dividend yield is caused by a weakening business rather than a temporary decline in share price.
Three Questions Every Dividend Investor Should Ask
Before investing in any dividend-paying company, three important questions should be answered.
1. Does the company generate enough cash?
Dividends are paid from cash, not accounting profits.
A company that consistently generates strong cash flow is more likely to maintain or increase future dividend payments.
2. Is the payout ratio reasonable?
The payout ratio shows how much of a company's profit is distributed as dividends.
If a business pays out nearly all its earnings, it may have limited funds available for expansion, future investments, or unexpected challenges.
3. Is the business becoming stronger?
The long-term safety of any dividend depends on the health of the underlying business.
Companies with growing revenue, rising profits, and improving competitive positions usually have a better chance of sustaining dividend payments.
NAHCO: Strong Growth but a Higher Payout Ratio
Nigerian Aviation Handling Company (NAHCO) has delivered remarkable dividend growth over the past five years.
Dividend payments increased from just ₦0.10 per share to almost ₦6.00 per share during the period.
Although the company's free cash flow temporarily came under pressure in 2022, cash generation improved significantly in both 2023 and 2024.
Revenue, earnings, and earnings per share have also continued to grow, with the positive trend extending into the first quarter of 2026.
One area that deserves attention is the payout ratio, which is now estimated to be between 60% and 90%.
While this does not necessarily make the dividend unsafe, it leaves less room for disappointing earnings in future years.
Overall, NAHCO appears to be a company worth monitoring closely rather than an immediate buying opportunity.
GTCO: Strong Financial Position Supports Dividend Growth
GTCO remains one of Nigeria's leading dividend-paying companies.
The bank currently pays ₦12.76 per share in dividends, giving investors a dividend yield close to 11% after the recent market correction.
Its financial position remains impressive.
During the first quarter of 2026, GTCO generated approximately ₦767 billion in operating cash flow, a significant improvement over the same period in the previous year.
The bank also holds about ₦1.7 trillion in retained earnings, providing a strong financial cushion.
Although the payout ratio has increased to roughly 54%, it remains within a level considered reasonable for a mature financial institution.
GTCO also maintains a capital adequacy ratio of approximately 39.5%, comfortably above regulatory requirements.
These factors suggest that the bank remains well-positioned to continue supporting future dividend payments, provided earnings continue growing.
Zenith Bank: Another Reliable Dividend Stock
Zenith Bank has also built an impressive dividend record.
Annual dividend payments have increased steadily from about ₦3.00 per share five years ago to a proposed ₦10.00 per share for the 2025 financial year.
The bank continues to report strong profitability and maintains a liquidity ratio of around 71%, indicating a healthy cash position.
Its capital adequacy ratio stands at approximately 23.5%, which remains comfortably above regulatory requirements.
Although Zenith Bank remains a strong dividend stock, GTCO currently appears to offer a stronger combination of dividend yield, capital strength, and financial flexibility.
Seplat: A Dollar-Earning Dividend Stock
Seplat stands out because its earnings are largely generated from oil and gas sales priced in US dollars.
Unlike many Nigerian companies affected by naira depreciation, Seplat benefits from earning revenue in foreign currency. It also pays dividends in US dollars.
During the first quarter of 2026, the company generated more than ₦1.16 trillion in revenue while maintaining healthy earnings.
Management expects production to reach between 135,000 and 155,000 barrels of oil equivalent per day during the year.
Another strength is Seplat's dividend policy.
Instead of committing to fixed annual increases, the company aims to distribute approximately 40% to 50% of its free cash flow as dividends.
This approach allows dividend payments to rise when business conditions are strong while reducing pressure during more difficult periods.
Although Seplat faces risks linked to global oil prices and energy markets, its disciplined dividend policy provides greater long-term sustainability.
Conclusion
The recent correction in the Nigerian stock market has increased dividend yields across several leading companies.
However, investors should avoid judging a stock solely by its dividend yield.
A sustainable dividend depends on strong cash flow, a reasonable payout ratio, and a business that continues to grow.
Based on these factors, GTCO and Zenith Bank remain strong dividend candidates, while Seplat offers the added advantage of dollar-based earnings and a disciplined dividend policy. NAHCO also shows encouraging business growth but may require closer monitoring due to its higher payout ratio.
For long-term investors, focusing on business quality rather than headline dividend yields can help avoid costly dividend traps.
What Do You Think?
Do you think the recent Nigerian stock market correction has created good buying opportunities for dividend investors?
Which dividend stock would you choose today: GTCO, Zenith Bank, NAHCO, or Seplat?
Besides dividend yield, what other factors do you consider before investing in a company?
Despite this decline, the market has still gained more than 47% during the year, suggesting that the recent drop may be a correction rather than the beginning of a prolonged bear market.
One important effect of falling share prices is that dividend yields become more attractive. However, a higher dividend yield does not always mean a better investment. Sometimes it reflects a weakening business rather than a genuine opportunity.
This raises an important question: Which Nigerian dividend stocks are still financially strong enough to continue rewarding shareholders?
Why a Falling Share Price Can Increase Dividend Yield
Dividend yield is calculated by comparing the annual dividend paid with the current share price.
For example, GTCO paid shareholders ₦12.76 per share for the 2025 financial year. When the stock traded around ₦122 per share, the dividend yield was approximately 10.5%.
After the share price dropped to about ₦117, the same dividend resulted in a yield close to 11%.
Nothing changed about the dividend payment. The only difference was the lower share price.
This explains why experienced dividend investors do not always fear falling prices. Sometimes they provide an opportunity to buy quality businesses at more attractive valuations.
However, investors should also be careful of a dividend trap, where a rising dividend yield is caused by a weakening business rather than a temporary decline in share price.
Three Questions Every Dividend Investor Should Ask
Before investing in any dividend-paying company, three important questions should be answered.
1. Does the company generate enough cash?
Dividends are paid from cash, not accounting profits.
A company that consistently generates strong cash flow is more likely to maintain or increase future dividend payments.
2. Is the payout ratio reasonable?
The payout ratio shows how much of a company's profit is distributed as dividends.
If a business pays out nearly all its earnings, it may have limited funds available for expansion, future investments, or unexpected challenges.
3. Is the business becoming stronger?
The long-term safety of any dividend depends on the health of the underlying business.
Companies with growing revenue, rising profits, and improving competitive positions usually have a better chance of sustaining dividend payments.
NAHCO: Strong Growth but a Higher Payout Ratio
Nigerian Aviation Handling Company (NAHCO) has delivered remarkable dividend growth over the past five years.
Dividend payments increased from just ₦0.10 per share to almost ₦6.00 per share during the period.
Although the company's free cash flow temporarily came under pressure in 2022, cash generation improved significantly in both 2023 and 2024.
Revenue, earnings, and earnings per share have also continued to grow, with the positive trend extending into the first quarter of 2026.
One area that deserves attention is the payout ratio, which is now estimated to be between 60% and 90%.
While this does not necessarily make the dividend unsafe, it leaves less room for disappointing earnings in future years.
Overall, NAHCO appears to be a company worth monitoring closely rather than an immediate buying opportunity.
GTCO: Strong Financial Position Supports Dividend Growth
GTCO remains one of Nigeria's leading dividend-paying companies.
The bank currently pays ₦12.76 per share in dividends, giving investors a dividend yield close to 11% after the recent market correction.
Its financial position remains impressive.
During the first quarter of 2026, GTCO generated approximately ₦767 billion in operating cash flow, a significant improvement over the same period in the previous year.
The bank also holds about ₦1.7 trillion in retained earnings, providing a strong financial cushion.
Although the payout ratio has increased to roughly 54%, it remains within a level considered reasonable for a mature financial institution.
GTCO also maintains a capital adequacy ratio of approximately 39.5%, comfortably above regulatory requirements.
These factors suggest that the bank remains well-positioned to continue supporting future dividend payments, provided earnings continue growing.
Zenith Bank: Another Reliable Dividend Stock
Zenith Bank has also built an impressive dividend record.
Annual dividend payments have increased steadily from about ₦3.00 per share five years ago to a proposed ₦10.00 per share for the 2025 financial year.
The bank continues to report strong profitability and maintains a liquidity ratio of around 71%, indicating a healthy cash position.
Its capital adequacy ratio stands at approximately 23.5%, which remains comfortably above regulatory requirements.
Although Zenith Bank remains a strong dividend stock, GTCO currently appears to offer a stronger combination of dividend yield, capital strength, and financial flexibility.
Seplat: A Dollar-Earning Dividend Stock
Seplat stands out because its earnings are largely generated from oil and gas sales priced in US dollars.
Unlike many Nigerian companies affected by naira depreciation, Seplat benefits from earning revenue in foreign currency. It also pays dividends in US dollars.
During the first quarter of 2026, the company generated more than ₦1.16 trillion in revenue while maintaining healthy earnings.
Management expects production to reach between 135,000 and 155,000 barrels of oil equivalent per day during the year.
Another strength is Seplat's dividend policy.
Instead of committing to fixed annual increases, the company aims to distribute approximately 40% to 50% of its free cash flow as dividends.
This approach allows dividend payments to rise when business conditions are strong while reducing pressure during more difficult periods.
Although Seplat faces risks linked to global oil prices and energy markets, its disciplined dividend policy provides greater long-term sustainability.
Conclusion
The recent correction in the Nigerian stock market has increased dividend yields across several leading companies.
However, investors should avoid judging a stock solely by its dividend yield.
A sustainable dividend depends on strong cash flow, a reasonable payout ratio, and a business that continues to grow.
Based on these factors, GTCO and Zenith Bank remain strong dividend candidates, while Seplat offers the added advantage of dollar-based earnings and a disciplined dividend policy. NAHCO also shows encouraging business growth but may require closer monitoring due to its higher payout ratio.
For long-term investors, focusing on business quality rather than headline dividend yields can help avoid costly dividend traps.
What Do You Think?
Do you think the recent Nigerian stock market correction has created good buying opportunities for dividend investors?
Which dividend stock would you choose today: GTCO, Zenith Bank, NAHCO, or Seplat?
Besides dividend yield, what other factors do you consider before investing in a company?