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Based on FY18 financial statements of BSE-500 constituents, an IiAS’ study this year identifies 75 companies that can return cash of up to ₹1.1-lakh crore to shareholders.
The excess cash, if distributed by these 75 companies, translates to a median dividend yield of 5.2 per cent, significantly higher than the current 1.4 per cent, IiAS, a corporate governance and proxy advisory firm, said on its web site.
According to the BSE, the dividend yield of the BSE-500 is 1.13 per cent.
“These companies have large cash holdings and can distribute about half of their on-balance-sheet cash (including cash equivalents) to shareholders, as dividends or buybacks. The cash available for distribution approximates one year’s profit after tax for these companies,” it added.
According to its findings, of the 75 companies, just five — Hindustan Zinc, ITC, Wipro, TCS and Bajaj Auto, aggregate over 50 per cent of the total incremental distributable cash of ₹1.1 lakh crore.
Excess cash to help
The Securities and Exchange Board of India had mandated India’s top 500 companies to formulate and disclose a dividend policy.
Excess cash in Indian Energy Exchange, MOIL, Multi Commodity Exchange of India, Bharat Heavy Electricals and Godfrey Phillips India can translate into an additional dividend yield of more than 15 per cent, IiAS said.
Besides, nine companies — Abbott India, Symphony, Dr Lal PathLabs, Bajaj Consumer Care, Godfrey Phillips India, Honeywell Automation India, Bata India, Pfizer and Hindustan Zinc can distribute over 75 per cent of their March 31, 2018, on-balance-sheet cash, it further said.
Public sector undertakings continue to pay consistent dividends on account of regulations requiring them to pay at least 30 per cent of their profits as dividends. “The median payout ratio for them at 28 per cent is the highest, ahead of all other ownership groups: promoter-owned (18 per cent), institutionally-owned (25 per cent) and multi-national corporations (21 per cent).
SEBI move
SEBI in 2016 had asked companies to include: the circumstances under which shareholders of the listed entities may or may not expect dividend; the financial parameters that should be considered while declaring dividend; internal and external factors that should be considered for declaration of dividend; policy as to how the retained earnings should be utilised; and parameters that should be adopted with regard to various classes of shares.
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