India Inc?s dividend payment has increased steadily during the last 10 years. Dividend payment of top 100 companies grew at a compounded annual growth rate of 17.86% during 2000-01 to 2009-10.
In actual value terms, the total dividend of top 100 companies steadily increased from Rs 11,268 crore during 2000-01 to Rs 49,210 crore during 2009-10. ONGC tops the list throughout the period. The CAGR of dividend payment of the oil 7 natural gas major was 17.79% during the 10-year period. The dividend payment of the company increased from Rs 1,568 crore during 2000-01 to Rs 6,844 crore during 2009-10 after a decline in 2003-04.
On the other hand , the private sector giant Reliance Industries improved its rank from sixth during 2000-01 to second during 2009-10. The dividend payment CAGR of the company was 28.4%. The actual dividend payment of Reliance Industries grew from Rs 447 crore during 2000-01 to Rs 4,251 crore during 2009-10.
Kishor P Ostwal, chairman and managing director, CNI Research, said: ?Over a period of last 10 years, that is the period under study, these companies have grown many fold. Their market capitalisation has improved significantly. Hence, to reward shareholders, they have increased dividend from time to time. In my opinion, irrespective of the vertical rise in dividend outgo, it is still less than the average cost of borrowings which has prompted promoters to give higher dividend.?
Among the 100 companies, more than 40% CAGR in dividend payment was achieved in the case of 11 companies. Mention may be made of Hero Honda Motor (47.64%), ICICI Bank (44.71%), NMDC (43.06%), Wipro (54.63%), Jindal Steel (62.87%), DLF (84.06%) and Sesa Goa (46.81%).
The dividend payment of Hero Honda Motor increased from Rs 60 crore during 2000-01 to Rs 1,997 crore during 2009-10.
Similarly, in the case of NMDC, the dividend payment grew from Rs 33 crore during 2000-01 to Rs 829 crore during 2009-10.
On the other hand, the lowest CAGR was seen in cases of Hindustan Unilever (8.07%), GAIL(I) (7.23%), Power Finance Corporation (6.74%), BPCL (1.32%), Tata Tea (8.81%) and Indian Hotels (7.54%).The dividend payment of Hindustan Unilever increased from Rs 770 crore during 2000-01 to Rs 1,548 crore during 2009-10.
A negative CAGR was registered in the case of National Aluminium (-3.15%), IDBI Bank (-5.23%), Tata Communications (-23.47%) and P&G Hygiene (-1.87%) during the period under review.
During 2009-10, the top five companies in terms dividend payment were ONGC, Reliance Industries, NTPC, SBI and Hero Honda Motor. In 2000-01, ONGC, Tata Comm, Hindustan Unilever, NTPC and IOCL held the top five slots. ONGC and NTPC are common in the list of top five during both the years.
Among the 100 companies, 57 companies? dividend payment CAGR exceeded the average dividend payment CAGR of top 100 companies during the last 10 years.