Shareholders got record-high dividends in FY24. Will the trend continue?
₹ 2.2 trillion in at least six years. A Mint analysis of 132 companies whose data for 2023-24 was available shows a steady increase in dividend payout ratios over the past six years. During the fiscal year, the payout ratio reached a little over 59%, exceeding the previous five-year average of 54.8%.
For the second consecutive year, the growth in the largesse has outpaced the companies’ bottom line growth– while net profits witnessed a modest single-digit increase of 9.3%, dividend payouts surged at a double-digit rate, the data showed. “The current trend of rising dividend payouts is likely to continue in the coming years. With sustained economic growth, improving corporate profitability, and prudent financial management by companies, there remains a positive outlook for shareholders benefiting from increased dividend distributions," said Arvinder Singh Nanda, senior vice president, Master Capital Services Ltd.
Some of the biggest dividend payers in 2023-24 include Vedanta, Tata Consultancy Services, and public sector firms such as Oil and Natural Gas Corp. and Power Grid Corp. of India.
The metal and mining major Vedanta led the pack with a hefty ₹ 54,402 crore payout. This was followed by TCS ( ₹ 26,486 crore), Infosys ( ₹ 19,093 crore) and ITC ( ₹ 17,163). “This financial year (FY24), companies with healthy profits rewarded investors by paying dividends.
The trend is expected to be similar this year, with no immediate increase anticipated," said Abhilash Pagaria, head, Nuvama Alternative and Quantitative Research. “Vedanta could pay higher dividends mainly because it received dividends from Hindustan Zinc. The information technology (IT) and public sector undertaking (PSU) sector should continue to deliver dividends
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