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Sensex Continues Momentum; Hindustan Zinc Gains 3% on Special Dividend
Thu, 23 Mar 11:30 am

After opening the day on a firm note, Indian share markets continued their momentum and are presently trading in the green. Sectoral indices are trading on a positive note with stocks in the capital goods sector and energy sector leading the gains.

The BSE Sensex is trading up 131 points (up 0.5%) and the NSE Nifty is trading up 42 points (up 0.5%). The BSE Mid Cap index is trading up by 0.9%, while the BSE Small Cap index is trading up by 1%. The rupee is trading at 65.43 to the US$.

Hindustan Zinc's share price jumped over 3% in morning trades today on the back of massive dividend announced by the company. The company has announced a special one-time interim dividend of 1,375% or Rs 27.50 on its equity share with the face value of Rs 2. The same is going to cost the company Rs 139 billion including dividend distribution tax(DDT).

This, along with the special golden jubilee dividend of 1,200% paid in April 2016 and the interim dividend paid in October 2016, the aggregate dividend being paid by Hindustan Zinc during this financial year stands around Rs 271 billion including DDT. This is recorded among the largest dividend outflows by any company in India in a single financial year.

As far as our views on dividend investing are concerned, investing in a stable dividend-paying company can be a good bet against stock market volatility and economic cycles. The business will generate a steady passive income. The more stable the business, the higher the share of profits that can be distributed.

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But that does not mean you should jump into stocks with the highest dividend payout ratio. If a company pays out all its profits as dividends, it may not always be a good sign. It could imply that there's no chance of investing the profits back into the business at a decent return.

High dividends paying stocks may not be the best to invest

So rather than arbitrarily investing in dividend stocks, what one should do is to buy the most solid, consistent, and fastest-growing dividend companies - something that we like to call 'Dividend Multibaggers'.

But what exactly are these dividend multibaggers? How do you find them? What price should you pay for them?

In the Hidden Treasure Steady Income Small Cap Premium, we bring you our best bets in dividend investing, without compromising on fundamentals. To know more about these stocks, click here.

In other news, the Lok Sabha yesterday completed the Budgetary exercise for 2017-18 with the passage of the Finance Bill.

This comes as the Finance Bill with 40 amendments was passed by the House by voice vote yesterday.

Among the proposals placed, the provision to cap legal cash transactions at Rs 2 lakh from April 1 got approval. The intention here is in line with the proposed Budget measure aimed at discouraging black money through restriction on cash transactions to Rs 2 lakh from Rs 3 lakh.

It also forms a part of the government's fight against black money, of which Notebandi formed a key element.

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Mar 21, 2018 (Close)