Corporates have been generous in declaring dividends despite a disappointing growth in profits last year.

Companies that make up Sensex have recorded a six per cent profit growth for 2012-13. However, the proportion of profits (standalone) paid out as dividends stand at 35 per cent, up from 31 per cent for 2011-12.

Of the 29 companies that have so far declared the full-year dividends in the Sensex basket, 17 of them have increased dividend payments (per share). This includes Hero MotoCorp (Rs 60 vs Rs 45/share), Hindustan Unilever (Rs 18.5 vs Rs 7.5/share), State Bank of India and Coal India.

Hero MotoCorp and ITC have paid over half of their profits as dividends to shareholders.

Not stopping with higher dividend payouts, some companies from the Sensex have declared bonus shares too.

The board of L&T declared one bonus share for every two shares of the company on account of its platinum jubilee year. Sun Pharma announced a 1:1 bonus with the company crossing the $2-billion revenue mark. The former had increased the dividend for the year to Rs 18/share from Rs 16.5/share last year. In the latter’s case, dividend is 75 paise higher for a share.

Eight companies of the Sensex pack have cut the dividends paid. These include Infosys (Rs 42 vs Rs 47), Bharat Heavy Electricals, ONGC and Tata Steel (Rs 8 vs Rs 12) among others. We may exclude Infosys on the grounds that last year was an unusual year with special dividends and the comparison doesn’t stand, but then, what about others?

They might want to be excused on grounds of profit crunch. Tata Steel, for instance, saw its net earnings drop 24 per cent for the year. ONGC recorded a 17 per cent decline and BHEL saw profits dropping six per cent.

Bajaj Auto, Bharti Airtel, Cipla and Jindal Steel have maintained status quo and there was no change in their dividend declarations.

rajalakshmi.sivam@thehindu.co.in

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