Why Your Dividend Is Smaller Than the Money You Used to Buy Shares in Nigeria

Many Nigerians still don’t understand how dividend works in Nigeria.
Some people invest millions of naira in shares and become shocked when the dividend they receive looks “small.”
The truth is this: dividend is not based on the amount of money you used to buy shares. It is based on the number of share units you own.

In this guide, I’m going to break down how Nigerian stock dividends work, how registrars pay dividends, why withholding tax is deducted, and why smart investors focus more on capital appreciation than dividend alone.

“Many Nigerians think dividend means FREE MONEY…
That is why many people enter the stock market with the WRONG mindset.”

Now calm down…
let me explain.

A few days ago, one of the men I respect very much called me on phone.
He said:
“Iking Ferry, I don’t understand what is happening o…
After your analysis on one particular Nigeria bank stock, I bought the shares.
Now they have paid dividend yesterday…
But the money is too small.
How can I invest millions and receive this kind of dividend?
Hope my stockbroker did not cheat me?”

Now first of all…
I laughed.
Not because the question was funny…
But because I realized that MANY Nigerians actually think this same way.
And this is exactly why financial literacy is very important.

Now…
Let me first correct one impression….
Your STOCKBROKER does NOT pay your dividend.
Yes.
The people that pay your dividend are called REGISTRARS.
Your stockbroker only helps you buy and sell shares.
So if dividend enters your account…
it came from the company’s registrar, not from your stockbroker.

Now… as your Financial Literacy Advocate..
Let me explain how dividend actually works with a simple story in a way that even Mama Ngozi that sells tomatoes in the village will understand.

Imagine Mama Ngozi joins a tomato business cooperative in the village.
Let’s say:
• The cooperative has 100,000 baskets of tomatoes in total.
• Mama Ngozi owns 10,000 baskets out of the total.
Now after one year…
the cooperative makes profit.
But…
The village head now says:
“For every basket you own, we are paying ₦10 profit.”
Now listen carefully.
Mama Ngozi owns 10,000 baskets, right?
So all she needs to do is:
10,000 × ₦10
= ₦100,000
That is her dividend.
Simple.
And That is exactly how shares work.

Now let’s bring it back to stock market.
If you own:
10,000 units of shares
And the company declares:
₦10 dividend per share
What you will receive is:
10,000 × ₦10
= ₦100,000

But wait…
That is not even the final amount yet.
Because government will still collect withholding tax.
Yes.
There is something called:
WITHHOLDING TAX ON DIVIDEND.
And in Nigeria, the withholding tax on dividends is usually 10%.
Meaning:
10% of ₦100,000
= ₦10,000
So after tax deduction…
what finally enters your account becomes:
₦90,000

Now this is where many Nigerians get confused.
They think:
“If I used ₦1 million or ₦5 million to buy shares…
then my dividend should also be ₦1 million.”
No.
That is not how stock market works.
Dividend is not based on:
“How much money you used to buy shares.”
It is based on:
“How many units of shares you own.”

Now let me even shock you.
Most smart investors don’t even focus mainly on dividend.
Yes.
Because.. The REAL wealth in stock market mostly comes from something called: CAPITAL APPRECIATION.

Now what is capital appreciation?

Capital Appreciation simply means:
the increase in the value of your shares.
For example…
Let’s assume somebody bought shares worth ₦1 million.
Then after some months or years…
the value of those shares rises to ₦1.85 million.
What happened?
The investor has made:
₦850,000 gain.

That ₦850,000 is called:
CAPITAL APPRECIATION.
And this is one thing many Nigerians don’t understand.
Your shares are still your PROPERTY.
The money did not disappear.
As long as the company remains profitable and investors keep valuing the company highly…
your shares can continue appreciating.

That is why I always tell people:
Stock market is not “quick money.”
It is ownership.
and…
You are becoming a PART OWNER in a business.

Now let me say something very important.
One of the reasons why I don’t usually mention the exact names of some companies publicly while discussing investment opportunities is because…
many Nigerians invest emotionally.
and The moment they hear:
“This company is good…”
everybody rushes to buy.
Without understanding:
• the risks
• the financial statements
• the debt level
• the growth potential
• the management structure
• the market conditions
That is dangerous.
Very dangerous.

This is why whenever I analyze any company…
I always try to break down:
• the good side
• the bad side
• the opportunities
• the risks
Then YOU make your own decision.
Because investment is PERSONAL RESPONSIBILITY.

Now let me end with this.
Many Nigerians enter the stock market expecting:
“Instant wealth.”
But the real investors understand something deeper.
They understand:
• patience
• compounding
• long-term thinking
• ownership mindset
That is the real game.
And this is why financial literacy is important. and all thanks to Fokona for making this knowledge Free and accessible in Nigeria.
Because without financial literacy…
many people will keep misunderstanding how money actually works.

My name is Iking Ferry
And I don’t just teach people how to buy shares…
I teach them how to THINK like investors.