At least 73 of the top 500 BSE-listed companies together can potentially pay additional Rs 20,000 crore as dividend to investors since most of them have large cash balances, says a report.
Proxy advisory firm IiAS today said there are at least 73 companies that can potentially return cash to its shareholders by way of dividends or buybacks.
The conclusions are based on a study of the companies' financials for fiscal 2015.
Noting that at least 73 of the S&P BSE 500 companies can double the amount of dividends, IiAS said they can pay more than Rs 20,000 crore more.
"Incremental dividend payout from the 73 companies could aggregate Rs 213 billion, equivalent to the amount these 73 companies actually paid out in FY 15 (Rs 213 billion)," it said in a report.
According to IiAS, dividend payouts have steadily risen over the last few years for S&P BSE 500 companies and that amount has outpaced growth in net profits over the past five years.
"Median dividend payout ratios increased to 24 per cent in FY 15 from 21 per cent in FY 10. Dividends, in absolute amounts, have grown at a CAGR of 14 per cent, while profits have grown at a more modest 7 per cent CAGR between FY 10 and FY 15," it noted.
For the study, out of the S&P BSE 500 companies, many entities were filtered out based on various criteria, including exclusion of banks and non-banking financial companies.
According to the proxy advisory firm, 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 payouts increase shareholder interest in the stock and, to that extent, makes fund raising easier," the report added.
