Promoters, large investors make big money from dividends

With another financial year coming to a close and a series of annual general meetings coming up, another round of dividend declarations are in the offing.

While dividends may not add up to a substantial sum for an ordinary investor, there are a few promoters and large investors of Nifty companies who have made big money through dividends paid out by their companies last year.

With the profits of India Inc surging, this year may only be better!

Top earners

Promoters of technology companies seem to top the list of dividend earners in India's top 50 companies. Going by the data, Mr Azim Premji earned Rs 33.65 crore in dividends for FY-10, on his personal holding of 3.82 per cent in Wipro (as of end-March 2010).

However, many promoters hold stakes through associate companies as well. If you add up all the entities making up Wipro's promoter group, the dividends add up to Rs 700 crore.

Next in the line of individual dividend earners is Sun Pharma's Mr Dilip S. Shanghvi, with Rs 31.78 crore.

Members of the Infosys promoter group dominate the top 15 earners with collective dividends of Rs 159.2 crore. This group includes Ms Sudha Gopalakrishnan, Mr Nandan M. Nilekani and Ms Sudha N. Murthy.

Other prominent individuals were from the promoter group of Cipla such as Mr Y.K. Hamied (Rs 24.97 crore) and Mr M.K. Hamied (Rs 7.9 crore).

Growth in dividends

As profits bounced back from the slowdown, Nifty companies have increased dividend payouts in 2009-10 by a collective 31 per cent to Rs 43,951 crore compared with 2008-09.

Top individual dividend earners have received a higher dividend in 2009-10 compared to the previous year simply on account of higher dividends paid by the company rather than increases in stake holding.

In fact, the top six promoters in the list reduced equity stake between March 2009 and March 2010.

Among those who have seen substantial jumps in dividends are Hero Honda's promoter group members. In their case, dividends earned in FY-10 were more than five times that in FY-09.

Of course, dividend received by individual shareholders pale in comparison to the dividend mopped up by the biggest investor of them all – the Government.

Over Rs 11,000 crore in dividends was earned by the Government by virtue of its holdings in PSU behemoths such as ONGC, NTPC, SAIL and BHEL.

Methodology

To arrive at dividend earners here, we considered the companies that make up bellwether index Nifty, and compiled the shares they held in their individual capacity. The disclosed shareholding at end-March 2010 was multiplied by the company's payout for 2009-10 to arrive at the dividend.

Only shares held in individual capacity were considered. The dividends earned by the promoter group as a whole are presented in the accompanying table.