What is a dividend?
Expanding your sources of Income?
Dividends are typically paid out on a regular basis by companies, such as quarterly or annually, but companies may also choose to pay special dividends on occasion.
A dividend is a distribution of a portion of a company’s earnings to its shareholders. When a company earns a profit, it may choose to reinvest the earnings back into the company or distribute a portion of the profits to its shareholders in the form of dividends. Dividends can be paid out in cash, additional shares of stock, or other property.
It’s important to keep in mind that the payment of dividends is not guaranteed, and a company may choose to suspend or reduce its dividend payments if its financial performance deteriorates or if it needs to conserve cash for other purposes.
If a company dishes regular dividends, and the share price of the company increases steadily, this signifies that the company is operating in the right direction.
What is a dividend payout ratio?
Dividend Payout Ratio = (Dividend / Earnings After Tax) * 100
Payout is the health meter to understand how regularly the company releases dividends.
Companies with a high but average Payout Ratio is preferred by investors who expect a steady stream of income from dividends.
A Payout Ratio below 50% per year, is considered healthy.
What is Dividend Yield?
Dividend Yield = (Dividend/Share Price) * 100
Dividend Yield can be more when
- Dividend increases – Good Thing!
- Share Price decreases – Bad Thing!
If Dividend Yield is too high, this means, that
1.The company is not saving up some of its earnings to invest in future growth for issuing dividends in the future regularly.
2. Or Share Price is decreasing and investors are selling shares fast.
A Good Dividend Yield is below 6%.
What is Interim Dividend?
An interim dividend is a dividend payment made by a company to its shareholders in the middle of its financial year, before the company’s annual financial statements have been finalized.
If the company can afford to announce dividends in the middle of the year, this signals that the company is performing well.
What is Final Dividend?
A final dividend is a dividend payment made by a company to its shareholders at the end of its financial year, after the company’s annual financial statements have been finalized.
Companies may choose to suspend or reduce their dividend payments if their financial performance deteriorates or if companies need to conserve cash for other purposes.
1. Emami :
Familiar with Boro Plus, Fair & Handsome and Zandu Balm?
Emami is one of India’s leading FMCG companies engaged in manufacturing & marketing personal care & healthcare products. Emami is the flagship company of the diversified Emami Group.
In 2022, the company declared a final dividend of Rs 8 per share, with the dividend payout standing at 41.5%. The company acquired Dermicool and a few other brands. This boosted growth by 30%. Hence, the company was able to afford to dish out dividends payouts.
Since 2000, this company has declared 29 dividends.
The five-year average dividend payout ratio stands at 27.8%, with a dividend yield of 1.5%.
2. CRISIL :
CRISIL is one of the leading credit rating agencies in India.
When you secure a loan from the bank, the bank checks your CRISIL Ratings.
The CRISIL Rating tells, how much loan did you get in the past, and how regularly you repaid it. Then the Bank decides what is the certainty that you will repay your loan.
It also provides research and risk advisory services.
CRISIL analyzes the risks in assets and companies for investors.
In 2022, the company declared a final dividend of Rs 15 per share, with the dividend payout standing at 72%. The increase in payout was due to the reduction in sales tax and higher sales.
Since 2001, this company has declared 69 dividends. The five-year average dividend payout ratio stands at 66.5%, with a dividend yield of 1.7%.
3. Supreme Industries :
Supreme Industries is a leader in India’s plastic industry. It is engaged in the production of plastic products and operates in various product categories like plastic piping systems, Cross laminated film and many more.
In 2022, Supreme Industries declared an interim dividend of Rs 6 per share and a final dividend of Rs 18 per share. The company paid a total of Rs 24 per share, with a dividend payout ratio of 39.9%. The high payout was due to a decrease in the finance cost and an increase in sales.
Since 2000, the company has declared 39 dividends. The five-year average dividend payout ratio stands at 38.1%. The dividend yield over the past five years has been 1.2%.
4. Balkrishna Industries :
Balkrishna Industries manufactures Off-Highway Tyres (OHT). The Dr.Tyre of India fills up dividends from Tyres apart from filling Tyres.
To put it simply, your bicycle with an ordinary tyre stands at risk of being punctured if your ride on uneven terrains – rocky roads, and uphill fields. This is where an MTB comes in.
This is what Balkrishna does with tyres for agriculture, industry, construction, earthmovers and port mining.
Balkrishna Industries, for the financial year 2022, declared two interim dividends of Rs 4 per share, a special dividend of Rs 12 per share and a final dividend of Rs 4 per share each. The company paid a total of Rs 28 per share, with a dividend payout ratio of 37.7%.
The company declared a special dividend on the occasion of the diamond jubilee year. Since 2002, the company has declared 48 dividends. The five-year average dividend payout ratio stands at 29.3%. The dividend yield over the past five years has been 1.3%.
5. Cummins India :
Cummins designs, manufactures, and sells diesel and alternative fuel engines, generators, and related accessories. It also provides after-sale services.
Cummins declared an interim dividend of Rs 8 per share and a final dividend of Rs 10.5 per share.The company paid a total of Rs 18.5 per share, with a dividend payout ratio of 60.9%.
The sales for the company rose by 41%, leading to an increase in dividend payout. Since 2001, the company has declared 44 dividends. The five-year average dividend payout ratio stands at 69.2%, with a dividend yield of 2.4%.
6. Colgate :
Yeah, The Toothpaste with Salt is from this Retail Giant.
Colgate-Palmolive (India) is a publicly listed subsidiary of the Colgate-Palmolive conglomerate in India. The company is India’s leading provider of scientifically proven oral care products. The range includes toothpaste, toothpowder, toothbrushes, and mouthwashes.
Colgate declared an interim dividends of Rs 21 and a final dividend of Rs 19 per share. For the financial year 2022, the company paid Rs 40 per share, with a dividend payout of 100.9%. This higher dividend payout was due to a 6% increase in the sales of the company.
Since 2001, the company has declared 58 dividends. The five-year average dividend payout ratio stands at 94.3%. The dividend yield over the past five years has been 2.3%.
7. Hindustan Aeronautics :
HAL is the mythical recluse stock of India. The company works with literally no competitors, since this PSU exclusively dabbles with the manufacture and maintenance of defense aircrafts.
Hindustan Aeronautics manufactures and maintains aircraft and helicopters for the Indian Airforce, Indian Army, ISRO, Indian Navy, and Indian Coast Guard, among others. As of March 2022 quarter, HAL had a healthy cash balance of Rs 143 bn, up 99% YoY.
In 2022, the company declared a final dividend of Rs 50 per share, with a dividend payout ratio of 37%. This payout was due to a 91% jump in the net profit of the firm.
Since 2008, this company has declared 15 dividends.
The five-year average dividend payout ratio stands at 75.9%. The dividend yield over the past five years has been 3.6%.
8. Oracle financial services :
This Oracle is not from Omaha! But if your mind switched to the IT Giant that tinkers with Databases, you were on point!
The company is a subsidiary of Oracle Global (Mauritius). The parent of OFSS is Oracle. Oracle operates in 150+ countries.
OFSS offers COTS products for CBS – FLEXCUBE and services clients like CITI bank, Barclay’s, Canara bank, HDFC with Fin Services.
In 2022, the company declared a final dividend of Rs 189 per share, with a dividend payout ratio of 86.8%. This payout was on the back of a marginal reduction in employee retention costs.
Oracle Financial Services has been a consistent dividend payer. Since 2002, the company has declared 13 dividends.
The five-year average dividend payout ratio stands at 75.9%. The dividend yield over the past five years has averaged 4.8%.
9. Bajaj Holdings & Investments :
Bajaj Holdings & Investment is a non-banking finance company (NBFC). Remember the Bajaj Auto Split in 2007?
The manufacturing business was transferred to Bajaj Auto (BAL), and the wind farm and financial services business was vested with Bajaj Finserv (BFS).
The company has declared a final dividend of Rs 115 per share for the financial year 2022, with the dividend payout ratio coming at 31.6%. The 17% rise in net earnings was the driving factor for the payouts.
Since 2001, the company has paid a total of 25 dividends. The payout ratio over the last five years stands at 17.5%, while the dividend yield stands at 1.6%. It was due to the increase in the profits.
10. Bayer CropScience :
Bayer CropScience is an Indian subsidiary of Bayer AG, the world’s largest life sciences company based out in Germany.
The company declared a final dividend of Rs 150 per share for the financial year 2022. The dividend payout ratio of the company stands at 104.5%. The 17% rise in net sales was the driving factor for the payouts.
Since 2001, the company has paid a total of 25 dividends.
The payout ratio over the last five years stands at 54.4%, while the dividend yield stands at 1.4%.
11. Union bank of India :
This is a Public Sector Bank in India. The Bank came up with this Fancy Policy, that went, “POLICY FOR DECLARATION OF DIVIDEND FOR THE YEAR”, and has paid consistent dividends.
The stock has given dividend yield of 4.13% by giving a dividend of ₹1.9 in the past 12 months while the price of the stock is ₹45.95. The stock price has grown by 1.77% in the past year.
12. National thermal power corporation (NTPC) :
Another PSU, which literally gets its hand dirty with coal and hydro to generate power for the masses.
This is also a CPSE whose stock has given a dividend of ₹7/share which gives its investors a dividend yield of 4.19% at a price of ₹166.95 per share. Its share price has increased by 10.41% in the past 1 year.
13. Bharat Electronics limited :
BHEL is one of the few PSUs left. This PSU manufactures or ties up to manufacture electronics for the public.
This CPSE stock has given a dividend of ₹4.5 per share (each share currently being priced at ₹105.95) thus giving a dividend yield of 4.25%. Even better, its stock price has skyrocketed this year by 54.93% in the last 12 months.
14. Steel authority of India :
SAIL is the Steel Grail of India. The PSU is a Maharatna with consistent performance. The company is engaged in the production of steel. Competition from the Private Trinity in Steel – JSW,JSPL & Tata Steel, has been a steady challenge for SAIL.
This CPSE stock has given a dividend of ₹8.75 with a current market price of ₹82.3 which gives its shareholders a dividend yield of 10.6%. Its stock price has however fallen by 29.47% in the past 12 months.
15. National Mineral Development Corporation limited :
NMDC is engaged with mining and minerals. Share price of this stock fell in line with the fall in metal sector in India and the holdups in the supply chain.
It gave a dividend of ₹14.74 in the last twelve months and its current share price is ₹132.85 which gives its shareholders a dividend yield of around 11.1%. Its stock price has fallen by 8.25% in the past 12 months.
16. Power finance corporation ltd :
Power Finance Corporation substantially reduced debt in the last 5 years. But the company reported profit margins less than ~7% from last year. But the organization reported high quality earnings and outperformed competitors in growth.
It gave ₹12 per share as dividend and has a current market price of ₹105.9 which makes its dividend yield equal to 11.33%. However, in the last year, its stock price has fallen by 24.88%.
17. Rural electrification corporation ltd :
It is a subsidiary of Power Finance Corporation Ltd. and it gave a dividend of ₹15.3 per share with a current share price of ₹95.75. This means its shareholders enjoy a dividend yield of 16%. In the last 12 months, its stock price has fallen by 19.56%.
18. Indian oil corporation limited :
Share Prices of IOC Fell because of the global energy crises and the change of different shareholders in the company.
The dividend yield of the company stands at 16.8% given that it paid a dividend of ₹11.4 in the past twelve months while its current share price stands at ₹67.85. Its stock price, however, has fallen by 22.13% in the last one year.
19. Vedanta ltd:
Vedanta conglomerate in India operates in many sectors. The conglomerate operates in energy, construction and metal.
The company gave ₹77.5 as dividends in the last one year and its current share price stands at ₹292.55. Therefore it has had a 26.5% dividend yield in the year 2022. However, its stock has largely overall not given much returns, with a fall of 0.85% in the last one year.
20. INEOS Styrolution India ltd:
This is the subsidiary of its German parent company which supplies Styrenics. Styrenics are the category of rubber used in disposable cups and plastics used in family planning 😉
In the past one year, the company has paid out dividends of ₹297, while its share price is currently at ₹875 – hence it has a dividend yield of almost 34%. Its share price has fallen by 40.28% in the last one year.
