According to a study, top 500 companies may double the
"FY15 financials shows that at least 73 of the S&P BSE 500 companies can double the amount of dividends. This is despite the fact that companies increased dividend pay-outs," an IiAS study said.
According to IiAS, around 77 companies could pay more. About 64 companies increased their dividends in the last financial year by Rs 1,640 Crores.
"India Inc. is stockpiling cash and must return it to shareholders if it does not have productive use for it. Distributing excess cash to shareholders on a regular basis helps companies demonstrate their confidence to continually generate earnings in future and show that the earnings are real. Higher dividend pay-outs increase shareholder interest in the stock and, to that extent, makes fund raising easier," it said.
The Sensex and Nifty has seen a downward curve in last few days.
"IiAS recommends companies disclose a retention policy - how much money they want to retain and why, rather than a dividend policy to provide investors clarity on the planned use of cash generated. We strongly believe that companies should obtain shareholder approval to retain cash specifying the rationale for doing so, and pay-out the remaining to shareholders as dividends: this cash belongs to all shareholders and is not for managements to keep," the report added.
Image credit: Indiatimes