Buying shares allows you to become a part-owner of a company and benefit from its growth and profits.
By purchasing shares in Nigerian companies, you can potentially earn dividends and see your investment appreciate over time.
However, it’s essential to approach investing in shares with knowledge and a strategic plan.
How to Buy Stocks in Nigeria
- Choose a Stockbroker
- Open a Stockbrokerage Account
- Research and Select Stocks
- Place a Buy Order
- Monitor Your Investments
1. Choose a Stockbroker
A stockbroker acts as an intermediary between you and the stock market. Select a reputable stockbroker that is registered with the Nigerian Stock Exchange (NSE) and licensed by the Securities and Exchange Commission (SEC).
2. Open a Stockbrokerage Account
Contact your chosen stockbroker to open a stockbrokerage account. Provide the necessary documents and complete the account opening process.
3. Research and Select Stocks
Conduct thorough research on companies listed on the Nigerian stock market. Consider factors such as their financial performance, industry trends, and growth prospects. Select stocks that align with your investment goals.
4. Place a Buy Order
Once you have chosen the stocks you want to buy, instruct your stockbroker to place a buy order on your behalf. Specify the number of shares and the price at which you are willing to purchase them.
5. Monitor Your Investments
After buying shares, it’s important to monitor your investments regularly. Stay updated on company news, market trends, and economic factors that may affect the performance of your shares. Consider setting up alerts or using investment apps to track your portfolio.
Best Nigerian Stocks to Buy in 2023
Tripple Gee and Company
Tripple Gee and Company is a reputable Nigerian company operating in the printing, in the printing, packaging, and branding industry.
The company has a strong market presence and a well-established customer base. The consistent demand for its services provides stability and potential for growth in the company’s revenue.
Tripple Gee and Company has consistently embraced new technologies and trends in the industry, allowing it to stay ahead of its competitors. This forward-thinking approach positions the company to capitalize on emerging opportunities and maintain its competitive edge.
International Energy Insurance Co
International Energy Insurance Co is a Nigerian insurance company specializing in providing coverage for the energy sector.
The company operates in a niche market, focusing on the energy industry. This specialization provides a unique advantage as it can tailor its insurance products to meet the specific needs of this sector.
International Energy Insurance Co has a strong financial performance and a history of profitability. The company has demonstrated its ability to effectively manage risk and generate sustainable returns for its shareholders.
MRS Oil is a well-established Nigerian oil marketing company that operates in the downstream sector of the oil and gas industry.
The company has a robust distribution network across Nigeria, which allows it to efficiently supply petroleum products to various regions of the country. This extensive network gives the company a competitive advantage in terms of market reach and customer accessibility.
MRS Oil has diversified its operations beyond traditional oil marketing. The company has expanded into other areas such as lubricant production, aviation fuel services, and storage facilities.
Transnational Corporation of Nigeria
Transnational Corporation of Nigeria, also known as Transcorp, is a leading conglomerate with diverse investments across various sectors of the Nigerian economy.
The company has a strong and experienced management team that has demonstrated its ability to drive growth and create value for shareholders.
Transcorp has a diversified portfolio that includes investments in power generation, hospitality, agribusiness, and oil and gas.
FTN Cocoa Processors
FTN Cocoa Processors is a Nigerian company engaged in the processing and export of cocoa products.
The company benefits from the country’s favourable climate for cocoa cultivation and its position as one of the largest cocoa-producing countries in the world.
FTN Cocoa Processors has established a strong market presence and customer base both domestically and internationally. The company has a reputation for delivering high-quality cocoa products, and its export activities contribute to foreign exchange earnings for Nigeria.
Ikeja Hotel is a prominent Nigerian hospitality company that owns and operates a range of hotels and hospitality establishments.
The country’s rich cultural heritage, business opportunities, and natural attractions make it an attractive destination for both domestic and international travelers.
The company’s hotels are strategically located in key cities, including Lagos, Nigeria’s commercial hub. This favorable positioning allows Ikeja Hotel to attract business travelers and tourists alike, enhancing its revenue potential.
Geregu Power is a Nigerian power generation company that operates a thermal power plant in Kogi State.
The company contributes to addressing the country’s electricity generation challenges, which presents a significant growth opportunity considering Nigeria’s growing population and industrialization.
Geregu Power benefits from a long-term Power Purchase Agreement (PPA) with the Nigerian Bulk Electricity Trading (NBET). This agreement provides revenue stability and mitigates the risks associated with fluctuating electricity prices.
Nigerian Aviation Handling Co
Nigerian Aviation Handling Co (NAHCO) is a leading ground handling company in Nigeria’s aviation industry.
The company benefits from the growth of Nigeria’s air travel market, driven by increasing passenger numbers and airline activities.
NAHCO have invested in state-of-the-art equipment, technology, and training to ensure the seamless handling of baggage, cargo, and other aviation-related services.
Conoil is a major Nigerian petroleum marketing company with operations in downstream oil and gas activities.
The company operates filling stations and retail outlets that provide petroleum products and related services to consumers. This widespread network gives Conoil a competitive edge in terms of market reach and customer accessibility.
Conoil has a diversified business model that includes other segments such as lubricants, aviation fuel, and gas distribution.
Livingtrust Mortgage Bank
Livingtrust Mortgage Bank is a Nigerian financial institution that specializes in providing mortgage and real estate financing solutions.
The company benefits from the increasing demand for housing and property development, driven by population growth and urbanization.
Livingtrust Mortgage Bank has a strong asset base and a well-established mortgage lending framework. The company has developed robust risk management practices and credit assessment procedures, ensuring the quality of its loan portfolio.
What Are Shares?
Shares, also known as stocks or equities, represent ownership in a company. When you buy shares, you acquire a portion of the company’s assets and earnings. The number of shares you hold determines your ownership stake and your entitlement to dividends and voting rights.
Types of Shares
There are different types of shares available in the Nigerian stock market. Common types include:
- Ordinary Shares: These are the most common type of shares and grant ownership rights and voting power in a company.
- Preference Shares: Preference shares provide preferential treatment in terms of dividends and claim on assets in the event of liquidation.
Benefits of Buying Shares
Investing in shares can offer several benefits, including:
- Potential for Growth: Shares have the potential to generate substantial returns over the long term. By investing in well-performing companies, you can participate in their growth and increase your wealth.
- Dividend Income: Many companies distribute a portion of their profits to shareholders in the form of dividends. By owning shares, you can earn regular income through dividend payments.
- Ownership in a Company: Buying shares grants you partial ownership in a company. This ownership can come with certain privileges, such as voting rights and the ability to influence important decisions through shareholder meetings.
Risks to Consider When Buying Shares
Investing in shares comes with certain risks. It’s crucial to be aware of the following factors:
- Market Volatility: Stock markets can be volatile, with prices fluctuating based on various factors. Be prepared for short-term price movements and focus on long-term investment objectives.
- Economic Factors: The performance of shares is influenced by economic conditions, such as inflation rates, interest rates, and GDP growth. Monitor these factors and their potential impact on the stock market.
- Company-specific Risks: Individual companies may face specific risks related to their industry, management, or competitive landscape. Assess these risks before investing in particular stocks.
How much money do I need to buy shares in Nigeria?
The amount of money required to buy shares in Nigeria depends on the price of the stocks you want to purchase. You can start with a small investment and gradually increase your holdings over time.
Can I buy shares directly from a company in Nigeria?
In most cases, shares are bought and sold through stockbrokers in Nigeria. However, some companies may offer initial public offerings (IPOs) where you can purchase shares directly from them.
Are dividends taxable in Nigeria?
Yes, dividends earned from shares are subject to taxation in Nigeria. However, there are tax exemptions and reliefs available based on certain conditions.
How often should I review my investment portfolio?
It’s advisable to review your investment portfolio periodically, considering factors such as market conditions, company performance, and changes in your financial goals. Many experts recommend conducting an annual review.
Can I sell my shares at any time?
Yes, shares can be sold at any time during market hours. However, the selling price may vary depending on market conditions and demand for the shares.