Even though I don't invest in stocks (not being part of the elite clan of 3-5% Indian population who do), I was/am still awed by the news items about the dividends declared by various companies... And the implied "wealth" they must have created for the "middle-class" investors...
Given this personal context (ignorence?!), I found this report about the dividends paid by Indian companies in the Outlook Business (July 20th '07) quite interesting:
- Between 01-02 and 06-07, the %age of profits that Indian companies paid as dividends dropped down from 12.85% to 10.71%
- "In the list of 309 companies (of the BSE 500) only 27 paid out more than 30% of profits as dividends. Of these, 11 were the MNCs that have traditionally reptriated high dividends."
- However, a look at the top dividend payers (in terms of %age of profits distributed) reveals an interesting finding - 15 of the top 20 dividend-payer companies had promoter holding of over 40%...
One must also note that in India, income from dividends is non-taxable....
And who were the "Hand-Sum Takers" of promoters' dividend during last 5-years?:
Asim Premji (Wipro)
Rs 2,154.38 crores
Shiv Nadar (HCL Group)
Rs 1,569.03 crores
BK Munjal (Hero Group)
Rs 503.25 crores
Rahul Bajaj (Bajaj Group)
Rs 431.79 crores
Anil Aggarwal (Sterlite)
Rs 568.11 crores
Dilip Sanghvi (Sun Pharma)
Rs 253.25 crores
...which reminds me of an old Hindi saying "पैसा पैसे को खीचता है" (money attracts more money) - or in modern paralance, we live in a (self-created) system where "The More You Have, The More You Get"...
Perhaps, that is why, the "trickle-down effect" does not happen...