DIVIDEND POLICYGROUP 5

4560

30 15 25 39

GROUP MEMBERS

Nirali Shah

Swati Jain

Angela Monteiro

Jagruti Godambe

Akshay Limaye

Adnan Quadri

FLOW OF PRESENTATION

What are Dividends

Factors affecting Dividend Policy

Dividend policy of 5 companies in FMCG sector

WHAT ARE DIVIDENDS

• A dividend is a portion of a company's earnings that is returned to shareholders

• Dividends can be determined by a fixed rate known as preferred dividends, or a variable rate based on the company's latest profits known as common dividends

• There are basically three dates to keep in mind when considering dividends

1. declaration date 2. record date 3. ex-dividend date

• Further, as the company continues to grow, the dividends themselves may grow, providing even more value to the investor

Factors affecting Dividend Policy1. Legal requirements

There is no legal compulsion on the part of a company to distribute dividend

2. Firm's liquidity position

In spite of sufficient retained earnings, the firm may not be able to pay cash dividend if the earnings are not held in cash

Factors affecting dividend policy

3. Repayment need

A firm uses several forms of debt financing to meet its investment needs These debt must be repaid at the maturity

4. Expected rate of return

If a firm has relatively higher expected rate of return on the new investment, the firm prefers to retain the earnings for reinvestment rather than distributing cash dividend

5. Stability of earningIf a firm has relatively stable earnings, it is more likely to pay relatively larger dividend than a firm with relatively fluctuating earnings

6. Desire of controlWhen the needs for additional financing arise, the management of the firm may not prefer to issue additional common stock because of the fear of dilution in control on management

7. Access to the capital marketIf a firm has easy access to capital markets in raising additional financing, it does not require more retained earnings. So a firm's dividend payment capacity becomes high

8. Shareholder's individual tax situationFor a closely held company, stockholders prefer relatively lower cash dividend because of higher tax to be paid on dividend income

DIVIDEND POLICY OF FMCG SECTOR

Dabur India Limited Dividend Policy• Dividend only paid from current year’s profit subject to

Provision for depreciationTransferring to reservesAfter setting off previous years loses if any

• No declaration of dividend out of reserves

• Dividend to net profit ratio will be maintained near to 50%

• Various factors to be considered before declaration of dividend

• Interim Dividend will be declared one to three time a year while final dividend will declared once a year depending upon profits earned throughout a year

Dabur India Limited Dividend Policy• Consistently declared dividends for the last 5 years

• Declared an equity dividend of 200.00% for the year ending March 2015 amounting to Rs 2 per share

• At the current share price of Rs 248.95, dividend yield is 0.80%AnnouncementDate

EffectiveDate

DividendType

Dividend(%)

Remarks

05-05-15 29-06-15 Final 75.00 Rs.0.7500 per share (75%)

08-09-14 19-09-14 Interim 125.00 Rs.1.2500 per share (125%)

Consistently declared dividends for the last 5 years

Declared an equity dividend of 200.00% for the year ending March 2015 amounting to Rs 2 per share

At the current share price of Rs 248.95, dividend yield is 0.80%

ITC Dividend policy• ITC has a good dividend track report

• Consistently declared dividends for the last 5 years

• Declared an equity dividend of 625.00% for the year ending March 2015

• Amounting to Rs 6.25 per share

• At the current share price of Rs 324.25, dividend yield is 1.93%

AnnouncementDate

EffectiveDate

DividendType

Dividend(%)

Remarks

22-05-15 03-06-15 Final 625.00 Rs.6.2500 per share

23-05-14 03-06-14 Final 600.00 Rs.6.0000 per share

17-05-13 31-05-13 Final 525.00 Rs.5.2500 per share

25-05-12 11-06-12 Final 450.00 -

20-05-11 10-06-11 Final 445.00 -

ITC Dividend Summary for last 5 Years

AnnouncementDate

EffectiveDate

DividendType

Dividend(%)

Remarks

22-05-15 03-06-15 Final 625.00 Rs.6.2500 per share

23-05-14 03-06-14 Final 600.00 Rs.6.0000 per share

17-05-13 31-05-13 Final 525.00 Rs.5.2500 per share

25-05-12 11-06-12 Final 450.00 -

20-05-11 10-06-11 Final 445.00 -

Godrej Consumer Products• In March 2016 declares interim dividend of 1.0000 per share (100%) ₹

• Usually gives 4 interim dividend in one financial year

• For year ending march 2015 it declared an equity dividend of 5.50 per ₹share (550%)

• At the current share price of Rs 1300.15, dividend yield is 0.42%

Dividend Type Declared atBoard Meeting Dated

Dividend rate pershare on shares of face value Rs. 1 each

Record Date

1st Interim for FY 2014-15 July 28, 2014 Rs. 1.00 August 4, 2014

2nd Interim for FY 2014-15 November 1, 2014 Rs. 1.00 November 12, 2014

3rd Interim for FY 2014-15 February 5, 2015 Rs. 1.00 February 13, 2015

4th Interim for FY 2014-15 April 28, 2015 Rs. 2.50 May 6, 2015

TOTAL Rs. 5.50

Godrej Consumer Products Dividend Summary

Dividend TypeDeclared atBoard Meeting Dated

Dividend rate pershare on shares of face value Rs. 1 each

Record Date

1st Interim for FY 2014-15 July 28, 2014 Rs. 1.00 August 4, 2014

2nd Interim for FY 2014-15 November 1, 2014 Rs. 1.00 November 12, 2014

3rd Interim for FY 2014-15 February 5, 2015 Rs. 1.00 February 13, 2015

4th Interim for FY 2014-15 April 28, 2015 Rs. 2.50 May 6, 2015

TOTAL Rs. 5.50

Pidilite Industries Dividend policy• Excellent dividend track record since last decade

• Consistently declared dividends for the last 5 years despite reduction in profits

• In March 2016 it declared Interim Dividend of 3.6500 per share (365%)₹

• In March 2015 it declared an equity dividend of 2.90 per share (290%)₹

• At the current share price of Rs 599.80, dividend yield is 0.48%

AnnouncementDate

EffectiveDate

DividendType

Dividend(%)

Remarks

19-05-15 14-08-15 Final 290.00 Rs.2.9000 per share

28-05-14 09-09-14 Final 270.00 Rs.2.7000 per share

28-05-13 05-07-13 Final 260.00 Rs.2.6000 per share

24-05-12 06-07-12 Final 190.00 -

19-05-11 08-07-11 Final 175.00 Rs.1.75 per share

Pidilite Industries Dividend Summary for last 5 Years

AnnouncementDate

EffectiveDate

DividendType

Dividend(%)

Remarks

19-05-15 14-08-15 Final 290.00 Rs.2.9000 per share

28-05-14 09-09-14 Final 270.00 Rs.2.7000 per share

28-05-13 05-07-13 Final 260.00 Rs.2.6000 per share

24-05-12 06-07-12 Final 190.00 -

19-05-11 08-07-11 Final 175.00 Rs.1.75 per share

Britania Industries Dividend policy• Declaring dividends since 2001

• No Interim dividend till today

• For the year march 2015 it declared an equity dividend of 800%

• It amounting to 16 per share (290%)₹

• At the current share price of Rs 2725.30, dividend yield is 0.59%

AnnouncementDate

EffectiveDate

DividendType

Dividend(%)

Remarks

21-05-15 27-07-15 Final 800.00 Rs.16.0000 per share

27-05-14 23-07-14 Final 600.00 Rs.12.0000 per share

24-05-13 23-07-13 Final 425.00 Rs.8.5000 per share

28-05-12 17-07-12 Final 425.00 -

27-05-11 19-07-11 Final 325.00 Rs.6.50 per share

Britania Industries Dividend Summary for last 5 Years

AnnouncementDate

EffectiveDate

DividendType

Dividend

(%)

Remarks

21-05-15 27-07-15 Final 800.00 Rs.16.0000 per share

27-05-14 23-07-14 Final 600.00 Rs.12.0000 per share

24-05-13 23-07-13 Final 425.00 Rs.8.5000 per share

28-05-12 17-07-12 Final 425.00 -

27-05-11 19-07-11 Final 325.00 Rs.6.50 per share