India Inc has recommended a dividend payout of Rs 3.26 trillion for 2022–2023 based on the expectation of a growing economy, increased earnings, and buoyant markets, said a report by the Financial Express (FE). This is a whopping 26 per cent higher than the nearly Rs 2.6 trillion paid out to investors the previous year.
The Rs 3.26 trillion dividend payment is made by 317 companies in the BSE 500 that have declared dividends. These companies' payout ratio has likewise climbed to 41.46 per cent in 2022-23 from 34.66 per cent in 2021-22, the report said.
IT major Tata Consultancy Services (TCS) topped the list with a total payout of Rs 42,090 crore, a 167.4 per cent rise from that in the previous year. Mining firm Vedanta, a subsidiary of London-based Vedanta Resources, came in second with a total dividend recommendation of Rs 37,758 crore, a 126 per cent increase from 2021-22, while Hindustan Zinc (HZL) came in third with a 319 per cent rise to Rs 31,899 crore.
Coal India (CIL) with a payout of Rs 20,491 crore (95.6 per cent rise), ITC with Rs 15,846 crore (11.8 per cent), Oil and Natural Gas Corporation (ONGC) with Rs 14,153 crore, and Infosys with Rs 14,069 crore were the others among the top 10 in the list, according to stock exchange data.
"This growth is expected to continue as the conditions in India are conducive to growth," Berger Paints India MD & CEO Abhijit Roy told FE.
The dividend per share recommended by the top three corporations was more than double that of the previous year, with TCS once again leading the charts. The IT firm recommended a dividend of Rs 115 per share for 2022-23, up from Rs 43 per share in 2021-22. Vedanta recommended Rs 101.50 per share (up from Rs 45), and HZL recommended Rs 75.50 per share (up from Rs 18).
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The dividend payment rise comes at a time when firms are expected to increase capital expenditures (capex) by around 14 per cent in 2023-24, and the upward trend is expected to continue for at least another three years.
Vedanta’s board has approved its first interim dividend of Rs 18.50 per share for 2023-24, with a total outgo amounting to Rs 6,877 crore and May 30 as the record date. The decision comes at a time when its parent company, Vedanta Resources, is attempting to shore up funds in order to reduce debt.
Meanwhile, industry experts advise shareholders against relying solely on dividends for investing.
"Shareholders should keep in mind that the investment premise should not be solely based on dividends. Many PSUs have significant cash on their balance sheets and are monopolistic businesses, but the stocks haven't delivered significant total returns to their shareholders due to inefficient capital allocation in their businesses," said Anurag Jhanwar, partner (family office advisory) at Upwisery Capital Advisors.