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The Equitymaster Research Digest

The March Dividend Bonanza, 7 Signs of 100-Baggers, and More
Mar 15, 2016

We first met Hawkins in 2012. By then we already loved its annual reports. Not for the graphics or glossy pages. It had neither of those. But for the simplicity with which the management communicated its keenness to use capital prudently. It committed itself to employing capital in a way that creates more than a rupee of shareholder wealth for every rupee invested. Else it would simply pay out dividends. Typical Buffett criteria!

Mind you, this was not a false promise. Among Indian firms, Hawkins has one of the most enviable track record, both in terms of return on capital employed and dividend payouts.

The generosity and consistency of payouts, coupled with the pace of earnings growth, made the company what I call a 'dividend multibagger'.

Now, even in India, dividend stocks are a dime a dozen. Rarely do any of them qualify as sound long-term investments.

Unfortunately, the businesses newspapers are littered with dividend bonanza stories these days. These are nothing but stories of scores of companies in the rush to pay out dividends in March. Your broker may have already called you to latch on to these. If not, expect an urgent call soon!

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