What to Look for Before Picking Nigerian Stocks in 2025

After years of high inflation and tight monetary policies, the country’s economy is now showing signs of relief and the investment mood is shifting.

And as Nigeria’s stock market continues to rise in 2025, more young Nigerians are paying attention to where their money should go next. 

The Central Bank of Nigeria (CBN) has started reducing interest rates, meaning fixed-income options like treasury bills may no longer offer the mouthwatering returns they once did. 

This change is pushing many investors back into equities, the stock market where exciting opportunities are emerging again.

It is a market on the move

Recent reforms, especially the ongoing bank recapitalization exercise, have given investors fresh confidence. Nigerian banks are injecting trillions of naira into the financial system, strengthening their operations and increasing market liquidity.

The insurance sector is also gearing up for recapitalization, while a more stable foreign exchange market is helping companies recover from the heavy losses they suffered between 2023 and 2024. 

With improved profits across many sectors, the Nigerian Exchange (NGX) has been buzzing. As of mid-October 2025, the All-Share Index (ASI) had already gained over 43% for the year proof that investor optimism is back.

Still, before diving in, every investor needs to know what to look for when choosing stocks. Here’s how to approach it in simple, practical terms.

Check for Liquidity

Liquidity is one of the first things you should consider before buying any stock. It means how easy it is to buy or sell shares without affecting the price too much.

If a company’s shares don’t trade often, you might struggle to sell when you need to, especially in emergencies. So, go for stocks with steady trading activity.

For example, companies like Zenith Bank, UBA, Access Holdings, Fidelity Bank, AIICO Insurance, and FCMB are among the most actively traded on the NGX, with millions of shares exchanging hands monthly. These are the types of stocks that offer flexibility and easier entry or exit.

Define Your Investment Goal

Before buying any stock, you need to understand why you’re investing. Are you looking for growth, steady income, or long-term value? Your answer will shape your choices.

a. Growth Investors

If you want your money to grow fast, look for companies that have been expanding their profits year after year — even through tough economic periods.

For instance, Wema Bank has seen its profit rise sharply in recent years, while agricultural firms like Okomu Oil and Presco Plc have posted strong growth, averaging over 60% profit increase annually. These are examples of companies that have managed to grow despite inflation and currency challenges.

b. Income Investors

If your goal is regular income, focus on companies that consistently pay dividends. Mature, cash-rich firms like Seplat Energy, Dangote Cement, Okomu Oil, Presco Plc, BUA Foods, and Aradel Holdings are good examples.

Before investing, compare dividend yields, this shows how much return you’re getting from dividends relative to the share price. Higher yields usually mean better income potential.

c. Value Investors

Value investing is all about buying stocks that are trading for less than what they’re truly worth. It’s like finding a good product on sale.

For example, BUA Foods might seem expensive because of its high earnings multiple, but with its impressive profit growth (over 70% annually) and consistent dividend payouts, it still offers great long-term value.

Study the Company’s Fundamentals

Beyond prices and profits, check whether the company’s operations are solid. How well is it managed? Are its debts under control? Is it in a growing industry?

Strong companies often show consistent earnings, clear business strategies, and a history of rewarding shareholders. Reading financial reports, market news, and expert reviews can help you identify these strengths.

Look for a Balance

There’s no single “perfect” stock. Some investors find the best approach is to combine the three elements, growth, income, and value while keeping liquidity in mind.

For example:

• Banks like GTCO, UBA, and Fidelity Bank offer both liquidity and dividend returns.
  
• Agricultural firms such as Okomu Oil and Presco give exposure to growth sectors.
  
• Big industrials like BUA Foods, Dangote Cement, and Seplat Energy deliver steady earnings and reliable payouts.
  

A balanced mix like this can help reduce risk while keeping your portfolio strong in different market conditions.