Companies hike dividends to boost investor morale
By siliconindia   |   Wednesday, 27 May 2009, 16:00 IST   |    3 Comments
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Companies hike dividends to boost investor morale
Mumbai: Instead of tightening purse strings to counter the ongoing recession, many companies are increasing dividend payouts to shareholders, irrespective of whether they are in loss or profit, indicates an analysis by The Economic Times. Data available for 377 companies shows that 131 of them have increased dividend for the year ended March 2009 or December 2008, giving a relief to investors. The list also includes a few companies where the data is available for the year ended September 2008 or June 2008. Among the companies that paid the highest dividend are EID Parry, Coromandel Fertilisers, Stovec Industries, VST Industries, Crisil, ICI India, Sulzer India, Nestle India and Clariant Chemicals. According to an analyst with a Mumbai-based broking house, "If companies are paying higher dividend, it is a positive trend, as it would help in boosting morale of shareholders, particularly those who have been holding shares with a long-term point of view." For the year 2008-09, sugar company EID Parry hiked dividend to 1000 percent from 25 percent previous year. On a standalone basis, the company recorded a bumper profit of Rs 692 crore on sales of Rs 812 crore, compared with a loss of Rs 17 crore on sales of Rs 651 crore in 2007-08. Its earnings were boosted by large extraordinary income of Rs 750 crore earned in the form of a profit on sale of investments. Coromandel Fertilisers increased dividend from 175 percent to 500 percent last fiscal. The company's sales jumped 150 percent to Rs 9,375 crore, while its net profit rose by 137 percent to Rs 496 crore, thanks to exceptional income of Rs 159 crore. "It is important to see if a company is paying dividend out of normal profit or profit earned from extraordinary sources. In normal circumstances, higher dividend shows the management has a good confidence in prospects of the company," said Anagram Stock Broking head of research VK Sharma. The list of dividend high-flyers, also includes multinational companies Sulzer India, Nestle India and Clariant Chemicals. The companies paid dividends of 350 percent, 425 percent and 190 percent, respectively, in the year ended December 2008, compared with 100 percent, 330 percent and 100 percent, respectively in the previous year.

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