It’s raining dividends again for shareholders

livemint.com:

₹4 trillion in the last fiscal year, registering a 28% rise from 2021-22, a Mint analysis showed. The analysis is based on 439 of the BSE 500 companies for which data was available. This includes proposed payouts, and uses both audited and unaudited numbers.

“A lot of things appear to have fallen in place in the fourth quarter of FY23," said Tanvi Kanchan, head of corporate strategy, Anand Rathi Shares and Stock Brokers. “Rural demand picked up, input costs have come down substantially, supply chain constraints are waning, and the Reserve Bank of India has given a hint that it is done with rate hikes for now. Corporate India is trying to make the best of the situation by paying out generous dividends in FY23." With this, dividend payments posted strong double-digit growth for the third year in a row.

An outpouring of corporate largesse since the pandemic—thanks to a tight leash on costs that led to a massive run-up in profits and a cautious investment environment—resulted in a hefty dividend payout-to-profits ratio of 42% on average in 2020-21 and 2021-22, which rose further to 44.6% in 2022-23 despite just a 6.8% rise in profits. But even during the pre-pandemic period, between 2010-11 and 2017-18, these generous giveaways outpaced the bottom-line growth of companies, translating into an average payout ratio of 36.1% during that period. Almost two-thirds of the companies in the sample have been unwaveringly sharing the bounties over the past five years.

In fact, 14.3% of the sample has increased their dividend payout each year since 2017-18. Some of the biggest dividend payers include Tata Consultancy Services, Vedanta and public sector firms such as Coal India, Oil and Natural Gas Corp. and Power Grid Corp.