10 Indian Companies with the Fastest Growth in Dividend Payouts...

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  • Jan 10, 2022 - 10 Indian Companies with the Fastest Growth in Dividend Payouts...

10 Indian Companies with the Fastest Growth in Dividend Payouts...

Jan 10, 2022

10 Indian Companies with the Fastest Growth in Dividend Payouts...

Fixed income assets are known for providing a relatively stable source of income in the form of interest. Whereas stocks are regarded as highly volatile and relatively unstable.

However, stocks also provide a source of income i.e. a dividend. A company pays dividends from its accrued profits and can be in the form of cash or stock.

So, if you are someone who wants to have a fixed and relatively stable source of income while being invested in the stock market, then look no further than companies which pay dividends regularly.

In this article, we take a look at ten companies which have been consistently paying dividends every passing year.

With the help of Equitymaster's powerful stock screener, we have been able to shortlist the top dividend growth stocks.

Let's take a look at each one...

#1 Britannia Industries

Britannia Industries is one of the prominent companies in the Indian food industry.

It's primarily engaged in the business of manufacturing and selling fast moving consumer goods (FMCG) products in categories like biscuits, breads, cakes, dairy, etc.

The products are distributed via a strong distribution network of 3,500 distributors catering to 2.4 m retail outlets across the country.

Although the company manufactures products across several categories, it earns the majority of its revenue from selling biscuits. Britannia's biscuit portfolio includes dominant brands like Good day, Marie Gold, Nutrichoice, JimJam, etc.

Sales from biscuits constitute 80% of the total revenue of the company. Therefore, it should come as no surprise that Britannia commands a leading market share of 28% in India's Rs 400 bn biscuit market.

Britannia has been paying dividends consistently since 1995. The company has paid 26 dividends in the past.

Britannia's dividend payout has grown at a CAGR of 98.7% in the last five years.

The following table shows the adjusted dividend paid by Britannia to its shareholders over the last five years.

Britannia Dividend History

  FY17 FY18 FY19 FY20 FY21
Dividend per share (Rs) 5.48 6.23 14.97 34.94 169.72
DPS growth (%)   13.7% 140.3% 133.4% 385.7%
Dividend payout ratio (%) 14.9% 14.9% 31.2% 60.4% 221%
Dividend payout ratio 5 year average (%) 68.5%
Source: Equitymaster

For more details, check out Britannia's financial fact sheet and quarterly results.

#2 Abbott India

Abbott India is one of India's fastest growing pharmaceutical companies.

It's an Indian subsidiary of American medical devices and healthcare company Abbott Laboratories. The company is engaged in developing and distributing branded medicines and nutritional products.

The company markets 600 pharmaceutical products for treating chronic diseases like cardiovascular diseases, diabetes as well as common health problems like common cold and gastrointestinal problems.

Abbott India possesses 15+ products which are market leaders in their respective therapy segments. One of Abbott India's widely consumed pharma products is Digene which treats gastritis or gastric problems.

Abbott India operates in a highly competitive industry and companies like GlaxoSmithKline, Sun Pharma, Cipla are some of the major competitors of Abbott India.

With the objective to become India's go to company for all healthcare needs, the company has added herbal supplements and menopause therapy products into its portfolio to cater to the changing needs of the consumers.

Abbot has rewarded its shareholders with dividends 25 times since 1996.

Abbott India's dividend payout has grown at a CAGR of 47% in the last five years.

Abbott India Dividend History

  FY17 FY18 FY19 FY20 FY21
Dividend per share (Rs) 40 55 65 250.01 275.01
DPS growth (%)   37.5% 18.2% 284.6% 10.0%
Dividend payout ratio (%) 30.7% 29.1% 30.7% 89.6% 84.6%
Dividend payout ratio 5 year average (%) 52.9%
Source: Equitymaster

For more details, check out Abbott India's financial fact sheet and quarterly results.

#3 Tech Mahindra

Tech Mahindra is an Indian multinational IT services and consultancy company.

Established in 1986 as a joint venture with British Telecom, the company is a part of the prestigious Mahindra group. Unlike its parent organisation, which is headquartered in Mumbai, Tech Mahindra has its headquarters in Pune with several offices across the world.

It's an indisputable argument that skilled manpower is the most valuable asset for any IT company. Tech Mahindra has employed 121,000 employees across its offices in 90 countries.

Tech Mahindra has consistently paid dividends to its shareholders since 2002. It paid its highest ever dividend of Rs 45 per share in the financial year 2021.

Tech Mahindra's dividend payout has grown at a CAGR of 37.9% over the last five years.

Tech Mahindra Dividend History

  FY17 FY18 FY19 FY20 FY21
Dividend per share (Rs) 8.14 12.74 12.8 13.47 40.52
DPS growth (%)   56.5% 0.5% 5.2% 200.8%
Dividend payout ratio (%) 27.7% 32.7% 28.5% 33.5% 90.4%
Dividend payout ratio 5 year average (%) 42.6%
Source: Equitymaster

For more details, check out Tech Mahindra's financial fact sheet and quarterly results.

#4 Nestle India

Nestle India is one of the largest FMCG companies in India. Established in 1956, it's an Indian subsidiary of Swiss multinational conglomerate Nestle AG.

Within the FMCG sector, Nestle is a prominent player in the food and beverage sector. It offers products across a range of categories like dairy (Milkmaid), cereals (Nesplus), baby cereals (Ceregrow), coffee (Nescafe), etc.

Strong brand recall combined with high pricing power gives Nestle an advantage over its peers. Nestle India's performance in the pandemic is a testament of its brand's popularity among the Indian masses.

Nestle India has proved to be a steady income generator for its shareholders as it has paid dividends almost every year since 1994.

In the financial year 2022, the company has paid two interim dividends of Rs 110 per share and Rs 25 per share.

Nestle India's dividend payout has grown at a CAGR of 26% for the last five years.

Nestle India Dividend History

  FY17 FY18 FY19 FY20 FY21
Dividend per share (Rs) 63 86 115 342 200
DPS growth (%)   36.5% 33.7% 197.4% -41.5%
Dividend payout ratio (%) 60.7% 67.7% 69.0% 167.5% 92.6%
Dividend payout ratio 5 year average (%) 91.5%
Source: Equitymaster

For more details, check out Nestle India's financial fact sheet and quarterly results.

#5 Polycab India

Polycab India is a leading electrical goods company in India. Established as a small electrical shop in 1964, Polycab has evolved into a large organization with a total market cap of Rs 368 bn.

Polycab India is engaged in the business of manufacturing and selling wires, cables, and fast moving electrical goods (FMEG) like fans, lighting and luminaires, switches, and switchgears, etc. The company also undertakes digital infra projects.

Although the company manufactures so many products, it earns the majority of its revenue from selling wires and cables. Polycab India is a leading player in the wires and cables segment with a total market share of 22%. Real estate developers, infrastructure companies are the major clients of Polycab.

Polycab India is the first company in India to receive Automotive Research Association

of India (ARAI) certification for its cables to be used in electric vehicles (EV). The company was also the implementing agency for BharatNet phase 2.

With the objective to be India's leading electrical goods manufacturer, the company has embarked on a journey to reach Rs 200 bn by fiscal year 2026.

The company's dividend payout has been growing rapidly as its capex requirement has gone down in recent years.

Polycab's dividend payout has grown at a CAGR of 60.1% over the last five years.

Polycab India Dividend History

  FY17 FY18 FY19 FY20 FY21
Dividend per share (Rs) 0.95 0.95 2.84 6.98 9.98
DPS growth (%)   0.0% 198.9% 145.8% 43.0%
Dividend payout ratio (%) 6.1% 3.9% 8.4% 13.5% 16.8%
Dividend payout ratio 5 year average (%) 9.8%
Source: Equitymaster

For more details, check out Polycab India's financial fact sheet and quarterly results.

#6 Polyplex Corporation

Polyplex Corporation is engaged in the business of manufacturing and distributing polyester (PET) films.

Polyester films are flexible and tear resistant films which find its application across several industries like packaging, electronics, etc. Polyplex is a multinational company serving 1,750 customers across 75 countries.

Established in 1984 with just a single PET line of 4,000 tons, Polyplex now has the seventh largest capacity globally. The company has capacities for manufacturing both thick and thin films with various thicknesses. Apart from India, the company has manufacturing facilities in Turkey, Thailand, USA, and Indonesia.

The company has been consistent with its dividend payout and has paid dividend every single year since 1997. It paid its highest ever dividend of Rs 164 per share in the financial year 2021.

This year, the company continued its dividend paying tradition and paid two interim dividends amounting to Rs 48 per share.

Polyplex's dividend payout has grown at a CAGR of 87.2%over the last five years.

Polyplex Corporation Dividend History

  FY17 FY18 FY19 FY20 FY21
Dividend per share (Rs) 7.13 40.75 51.95 17.32 163.99
DPS growth (%)   471.5% 27.5% -66.7% 846.8%
Dividend payout ratio (%) 6.2% 45.0% 27.9% 11.0% 59.7%
Dividend payout ratio 5 year average (%) 30.0%
Source: Equitymaster

For more details, check out Polyplex Corporation's financial fact sheet and quarterly results.

# 7 UltraTech Cement

UltraTech Cement is the largest producer of cement products in India. Its product portfolio includes grey cement, white cement, and ready mix concrete.

Backed by the Aditya Birla group, it's the third largest producer of cement products in the world. Interestingly, it's the only company to have a production capacity of 100+ m tonnes per annum within a single country.

The company's total capacity is spread across 22 manufacturing plants installed in the country. The company's products are marketed through a strong distribution network of 1 lakh channel partners and 2,500 exclusive brand outlets.

Similar to the company's share price, its dividend payout too has been growing since 2004.

UltraTech's dividend payout has grown at a CAGR of 31.2% over the last five years.

UltraTech Cement Dividend History

  FY17 FY18 FY19 FY20 FY21
Dividend per share (Rs) 9.51 9.99 10.94 13 37
DPS growth (%)   5.0% 9.5% 18.8% 184.6%
Dividend payout ratio (%) 10.1% 13.0% 13.2% 6.5% 19.6%
Dividend payout ratio 5 year average (%) 12.5%
Source: Equitymaster

For more details, check out the company's financial fact sheet and quarterly results.

#8 Escorts

Escorts is an Indian multinational conglomerate engaged in the business of manufacturing and selling engineering equipment.

Its products cater to high growing industries like agriculture and infrastructure. Escorts product portfolio includes tractors, cranes, air brake systems, shock absorbers, etc.

Established in 1944 in Lahore, the company started as a small agency for marketing Massey Fergusons tractors in India. By 1960, it was manufacturing tractors and X-ray machines in India. Since then the company hasn't looked back and has ascended to become an engineering conglomerate that it is today.

The company exports its products to 62 countries in addition to India. Farmers, infrastructure development companies, the Indian Railways are some of its key clients.

Escorts has 9 manufacturing facilities across the world with a total production capacity of 1,253,060 units. The company has a strong distribution network of more than 1,100 dealers.

Escorts dividend payout has grown at a CAGR of 40.5% over the last five years.

Escorts Dividend History

  FY17 FY18 FY19 FY20 FY21
Dividend per share (Rs) 1.28 1.7 2.13 2.13 7.01
DPS growth (%)   32.8% 25.3% 0.0% 229.1%
Dividend payout ratio (%) 14.1% 7.1% 6.4% 6.5% 11.6%
Dividend payout ratio 5 year average (%) 9.1%
Source: Equitymaster

For more details, check out Escorts' financial fact sheet and quarterly results.

#9 Vinati Organics

Vinati Organics is among the leading global manufacturers of specialty chemicals.

It's the largest manufacturer of iso butyl benzene (IBB) and acrylamide tertiary butyl sulfonic acid (ATBS) in the world. It commands a global market of 65% market share in these product categories.

IBB is used as an intermediate in the pharmaceutical industry. It's used in manufacturing ibuprofen which is an important chemical being used in painkillers. BASF - world's largest manufacturer of ibuprofen - is one of the key clients of Vinati Organics and contributes almost 40-50% to the total revenue generated from sales of IBB.

By supplying IBB at the lowest price possible, Vinati Organics eliminated its major competitors to become the market leader in the IBB category. The company can produce 25,000 tonnes of IBB per annum.

ATBS is a secondary chemical. It falls in the category of performance chemicals which are used as additives to enhance the performance of the primary chemical. ATBS has its application in several key industries ranging from paint coating to water treatment.

Sales from ATBS constitute 60% of the total revenue of the company. Vinati Organics has ATBS manufacturing capacity of 40,000 tonnes per annum.

The company is tapping the opportunities of backward and forward integration to add value added products in its portfolio.

Vinati Organics has been consistently paying dividends since 2000. Its dividend payout has grown at a CAGR of 115.2% in the last five years.

Vinati Organics Dividend History

  FY17 FY18 FY19 FY20 FY21
Dividend per share (Rs) 0.13 1.12 1.75 5.5 6
DPS growth (%)   761.5% 56.3% 214.3% 9.1%
Dividend payout ratio (%) 0.9% 8.0% 6.4% 16.9% 22.9%
Dividend payout ratio 5 year average (%) 11.0%
Source: Equitymaster

For more details, check out the company's financial fact sheet and quarterly results.

#10 Dr Lal Pathlabs

Dr Lal Pathlabs is a diagnostic healthcare company in India. With more than 200 clinical labs, it is one of the largest diagnostic chains in the country.

Established by Dr S. K. Lal, a former doctor in the British Indian Army, the organisation is currently headed by S.K. Lal's son, Arvind Lal, who is a graduate from the prestigious Armed Forces medical college (AFMC) and holds a rank of a brigadier in the Indian Armed Forces.

Many of the company's laboratories are ISO certified which is a hallmark of excellence. It has a test catalogue of 2,537 pathology tests and 1,961 radiology & cardiology tests.

Dr Lal Pathlabs provides pick up services through more than 7,000 pickup points spread across the country. This combined with more than 3,000 patient services centres allows Dr Lal Pathlabs to cater to 9,000 tests a day which is considered to be the highest in India.

Dr Lal Pathlabs has awarded its shareholders with a dividend 10 times since 2011. The company paid its highest ever dividend of Rs 20 per share in the financial year 2021.

In the financial year 2022, the company has paid an interim dividend of Rs 6 per share.

Dr Lal Pathlabs dividend payout has grown at a CAGR of 46.1% over the last five years.

Dr Lal Pathlabs Dividend History

  FY17 FY18 FY19 FY20 FY21
Dividend per share (Rs) 3 4.5 6 12 20
DPS growth (%)   50.0% 33.3% 100.0% 66.7%
Dividend payout ratio (%) 16.0% 21.8% 24.9% 43.9% 56.2%
Dividend payout ratio 5 year average (%) 32.6%
Source: Equitymaster

For more details, check out the company's financial fact sheet and quarterly results.

Snapshot of high dividend growth stocks from Equitymaster's stock screener

Here's a quick view at the above-mentioned companies based on some crucial financial parameters.

stock screener

Please note that these parameters can be changed according to your selection criteria.

Why should you invest in dividend paying stocks?

In most cases, if a company pays dividend regularly then it implies that the company is having strong cash flows and excellent corporate governance. Such companies are a gold mine for an investor.

Investing in such companies is a great opportunity for an investor to have a fixed source of income apart from capital appreciation. Regular dividends could also help an investor avoid panic and book losses in times of stock market downcycles.

However, not all dividend paying companies are great companies. Investing in a company just because it pays a hefty dividend is a wrong approach. Analysing free cash flows, debt levels, corporate governance, etc. is equally crucial.

To sum it up, check the overall fundamentals of a company before investing in it.

Speaking of dividend stocks, smallcap analyst at Equitymaster, Richa Agarwal, recently recorded a video exploring the concept of dividend investing.

Do not forget to check the list of stocks with healthy dividends which Richa has shared in the video.

Happy investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

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