MTN Ghana’s strong and ever growing profitability coupled with its stock market leading dividend payout ratio are ensuring exceptional returns to equity investors. TOMA IMIRHE documents what underpins this and examines its sustainability going forward.
This week, MTN Ghana paid out 80% of its after tax profits of GHc 5.0 billion as dividends to shareholders, this amounting to GHc4.0 billion, which has left equity investors in the company smiling all the way to the bank since the dividend payments were made earlier this month. Little wonder then that the company’s stock is one of the bluest chips on the Ghana Stock Exchange, highly desired by astute portfolio investors.
To be sure, MTN Ghana customarily has among the highest profits in corporate Ghana underpinned by among the highest net profit margins in the country and so combined with the highest dividend pay out ratio on Ghana’s stock market, this makes for not just outstanding returns on equity, but exemplary cash income for shareholders as well. And because this has proven so attractive to equity investors, the strong demand for its shares have made it a strong price growth stock as well.
In 2024, MTN Ghana delivered earnings per share of 38 pesewas for its shareholders and its high dividend payout policy enabled it to give out a total dividend of 30.5 pesewas per share, up 35.6% over the dividend per share paid in the previous year.
MTN Ghana has a strong diversified income base and strong cash flow, which combined, enable it to offer the highest dividend pay out ratio on the GSE without jeopardizing the company’s financial standing in any way. In 2023 the company delivered total revenues of GHc17.948 million, up 34.4% from the previous year and importantly, most of its services are prepaid by customers, meaning that it does not have substantial cash tied down by debt owed it.
Most of this revenue comes in the form of diversified service revenue from five distinct service lines. Data revenue grew by 53.8% in 2024 to GHc8.98 billion; mobile money revenue grew by 54.4% to GHc4.45 billion; and digital revenue grew by 66.1% to GHc228.2 million. Even with the marginal 0.9% decline in voice revenue it still contributed GHc3.35 billion; and the steeper 19.6% decline in “other” service revenues still put another GHc702.451 million in the kitty.
This has convinced equity investors on the GSE to seek MTN Ghana’s shares with determination and intensity, driving up the share price. However equity analysts predict there is still plenty of share price growth to come in both the immediate and longer term future. The company’s share price started the year at GHc2.50, but fueled by the outstanding financial performance announced in February, it had risen to GHc3.20 well before the dividend for last year was actually paid on April 16, an increase of 28% within less than three and a half months.
Despite its solid financial performance, MTN Ghana’s stock, currently trading at around GHc 3.20 per share, is still significantly below its fair value when considering its earnings growth, dividend payments, and market dominance.
Equity analysts are bullish on the stock for good reason: MTN’s share price was GHc2.50 at the beginning of the year 2025 at GHc2.50 and assuming a 50% average annual growth rate, the forecast share price for the coming years is GHc3.75 by the end of this year, GHc5.63 by the end of 2026 and GHc8.44 by the end of 2027.
Even the most conservative forecasts assert that if MTN Ghana continues on its current growth trajectory, the stock price could double within the next couple of years, making it an attractive buy at current levels, especially with both inflation and interest rates set to trend downwards over the coming months.
This growth expectedly will be fueled by rising revenues, net income and consequent dividends. Given its historical 35.49% dividend growth rate, some equity analysts project dividends per share of 36.6 pesewas for the 2025 financial year, 44 pesewas for 2026 and 52.8 for 2027.
This means investors can expect increasing dividend payouts, ensuring both capital gains and income generation.
Little wonder then that MTN Ghana’s shares are on the buy list of most equity analyst and stockbrokers in Ghana