JP Morgan has said that the dividend payout ratio for the BSE 100 stocks has remained stable over the last decade at around 20 percent, calling it “not satisfying” from a minority shareholder perspective.
The investment bank said capital-intensive growth, funding constraints and increased competition is leading to a more cautious stance from Indian companies on dividends.
It added that the consumer staples, consumer discretionary and health care sectors have seen stable or reduced dividend payouts, whereas IT services has doubled, though only to the broad market average.
The cash-rich, state-owned companies are likely to continue their “high” payout policy of around 20-30 percent given the government’s fiscal constraints, the bank noted.
Companies with stable to rising dividends have consistently outperformed the benchmark over the last decade, including Oil & Natural Gas Corp, Bharat Heavy Electricals, ITC , Hindustan Unilever and Hero MotoCorp .