Equity investing: What every investor should know, the NICOL story

WHEN you invest in equity , you are not just buying a share code or a number on the stock exchange. You are purchasing a stake in the future prosperity of a company.

A share represents ownership a right to participate in the company’s future earnings, growth, and decision making through shareholder votes. What you truly buy is a part of the company’s journey towards greater value.

This is fundamentally different from the mindset of a speculator, who aims to profit from short-term price movements without regard to the underlying business.

It is also different from traders who focus on frequent buying and selling to capture price volatility, or dividend hunters who focus primarily on cash payouts without necessarily looking at long-term company health.

A genuine equity investor is someone who aims to share in a company’s long-term growth, both through capital appreciation and dividend income. Good governance is at the heart of equity investing. When you buy into a company, you trust its management and board of directors to make decisions that protect and grow your investment.

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Governance ensures accountability, transparency, and responsible management of shareholder funds. When governance breaks down, even companies with strong potential can fail to deliver for investors.

A clear example of this is the story of National Investment Company Limited (NICOL), a company that once faltered due to governance issues but has since corrected its path. NICOL was established in 2003 as a private initiative aimed at mobilising investment capital from Tanzanians. In 2004, the company conducted an initial public offering (IPO), successfully attracting a broad base of shareholders by offering 80 million shares to the public. The company rebranded from NICO to NICOL in 2007 to distinguish itself more clearly in the market.

However, in 2011, NICOL was delisted from the Dar es Salaam Stock Exchange (DSE) due to non-compliance with listing rules and governance failures.

After several years of restructuring and addressing these issues, the company was re-listed on the DSE in June 2017. This marked a fresh start and renewed confidence among investors. Today, NICOL stands as one of the most promising mid-sized companies on the DSE.

Since the start of 2025, NICOL’s share price has climbed from 650/- to 950/- as of 20 June 2025, representing a 46 per cent capital gain year-to-date.

The stock has also reached a 12-month high of 1,100/- during this period. According to Orbit Securities’ valuation, NICOL’s target price is 2,638/-, offering an upside potential of 226 per cent from its current trading level. With a price-to-book ratio of just 0.31, the stock is trading at a deep discount relative to its net asset value, making it an attractive opportunity for value-focused investors.

Furthermore, NICOL’s dividend yield is strong at between 7.9 per cent and 8.8 per cent, with a dividend per share for 2024 financial year expected in the range of 64/- to 72/-.

The strength of NICOL’s portfolio lies in its strategic asset allocation. About 63 per cent of its investments are in equities, where its largest holding by far is NMB Bank.

This holding alone accounts for nearly 95 per cent of NICOL’s equity investments and provides a reliable stream of dividends, which in turn supports NICOL’s dividend payouts to its own shareholders.

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The company has also invested 23 per cent of its portfolio in government and corporate bonds, which offer more stable and predictable income. Real estate forms the remaining 14 per cent of NICOL’s portfolio, with assets such as the Mirambo 50 in Dar es Salaam’s central business district contributing steady rental income and strong occupancy levels.

NICOL’s story is a clear demonstration of how longterm investors can benefit by staying the course through periods of turbulence. The company has experienced both high and low points — from a promising start, through governance challenges and delisting, to a successful turnaround and renewed strength.

Those investors who remained patient and held their position in NICOL through these ups and downs are now well positioned to enjoy significant capital gains, attractive dividends, and the stability that comes from a more diversified and well managed portfolio.

Looking ahead, NICOL’s focus on balancing growth and income, combined with its strong asset base and improved governance, makes it a compelling choice for longterm investors who are willing to ride through market cycles in pursuit of sustainable wealth creation.