Dividend bonanza for shareholders in FY06

Mumbai, May 17 | Updated: May 18 2006, 05:30am hrs
A buoyant economy and higher topline and bottomline growth saw the corporate sector dish out handsome returns to shareholders.

Dividend payments stood at a hefty Rs 11,694 crore in 2005-06 up 37.9% from Rs 8,476 crore in 2004-05.

A study of corporate results of 253 companies showed net profits up 28.6% - from Rs 32,388 crore in 2004-05 to Rs 41,644 crore in 2005-06. The ratio of dividends to net profit increased from 26.17% to 28.08% over the same period.

Dr Dogra, ED, Care Ratings said: Corporates have performed better and hence the dividend rate as well as the payout have increased during 2005-06.

In a regime of rising stock prices, the dividend rate has necessarily to be increased if the dividend yield has to be protected,especially when corporates are doing so much better , he added.

Among the 227 dividend-paying companies for 2005-06 and 2004-05, 125 raised the dividend rate, 28 paid lower rates and 74 maintained their levels.

Among the companies that raised dividends in 2005-06 are Infosys, HCL Technologies, P&G Hygiene, Sulzer India, Tube Investments and Mastek.

On the basis of the rate of equity dividend, TCS topped the list of top 10 corporates followed by Infosys Techno, HCL Technologies, Hindustan Lever, Disa India, P&G Hygiene, Sulzer India, Godrej Consumer, Satyam Computer and Dabur India.

The significant increase in the dividend payment of Sulzer India can be explained by the sharp increase in profits.

The companys profit after tax for the year 2005-06 showed a quantum leap to Rs 21.77 crore compared to Rs 5.76 crore the previous year.

Companies which reduced their dividend rate significantly during 2005-06 are Astrazeneca Pharma, Kirloskar Brothers, Abbott India, Triveni Engineering and Krone Communications.