Indian companies have doled out large dividends this fiscal to prevent public shareholders from dumping their shares amid the economic uncertainties caused by the covid-19 pandemic and lockdowns.



Shareholders have also sought increased dividends this year to earn from equity investments and partly compensate their income losses. This has prompted various companies to incentivize their public shareholders.

At least 661 companies have announced dividends worth about 49,674 crore between April and September. Around 1,335 companies paid a total dividend of 60,767 crore in the same period last year, though their financials and stocks were performing much better at the time.

Shares of domestic companies came under pressure with the country imposing one of the world’s strictest lockdowns from March-end to contain the pandemic. “These are extraordinary times and require organizations to take extraordinary measures to support various stakeholders," said Castrol India chairman R. Gopalakrishnan.

Castrol India announced an interim dividend of 3 per share in June, in addition to the previously-declared interim dividend of 2.50 for fiscal 2019. A deferment of the company’s 42nd annual general meeting from April to July because of the lockdown had impacted both small and institutional shareholders, the company said. The board thus decided to pay an interim dividend during these unprecedented times to help release payment earlier to the shareholders, it said.

So far this fiscal, cigarette to hotels conglomerate ITC Ltd has announced the highest dividend of 12,477 crore in July after its stock continued to weaken amid sluggish volumes between May and June-end, implying waning interest among shareholders to stay against the backdrop of uncertainties over tobacco sales as a result of the pandemic.

The high dividend was paid despite ITC’s revenue and net profit dropping steadily from 12,013 crore in the December quarter to 11,420 crore in the March quarter and 9,502 crore in the June quarter.

The company’s net profit also fell steadily from 4,142 crore in the December quarter to 3,797 crore in the March quarter and 2,343 crore in the June quarter. “Shareholders will need to be taken care of. Dividend payouts may increase further significantly in the coming quarters. Large companies may be able to continue paying dividends but the mid-size and the small firms may lose out in this and this may lead to a migration of shareholders to blue chips from mid and small-cap," said a person close to a proxy advisory firm.

Besides ITC, the major dividend payers include HDFC Ltd, Infosys Ltd, Hindustan Zinc Ltd, and Reliance Industries Ltd, which paid dividends worth 3,643 crore, 3,514 crore, 2,446 crore and 2,235 crore, respectively, to their public shareholders.

Other top dividend-paying firms include NTPC Ltd, Hindustan Unilever Ltd, Larsen and Toubro Ltd, Power Grid Corporation of India Ltd, Britannia Industries Ltd, Maruti Suzuki Ltd, Tata Steel Ltd, Tata Consultancy Services Ltd, Bharti Airtel Ltd, Hero Motocorp Ltd, and Tech Mahindra Ltd.