Indian corporates virtually seem to be raining dividends on their shareholders (and on themselves/promoters too!) since the beginning of the year.

What was probably started by the IT companies that came out with quarterly dividend payouts emulating the foreign companies (may be as they have a large number of FII investors) has now caught up with the Indian companies also, if the flurry of interim dividend payments is any indication.

A look at the Corporate Actions page of the BSE would show that close to 45 companies had fixed as the ex-dividend date the period from January 1, 2013 till date (February 8) for the payment of interim dividend. Every day fresh announcements of interim dividend payments are made. In fact, last Friday also at least seven companies had announced that their boards would consider interim dividend in the coming days.

While many of the companies pay smaller amounts as interim dividend, some had announced fairly high payouts. Oil India with an Rs 11/share dividend payout, Bajaj Corporation (Rs 6.50), Persistent Systems (Rs 6), Neelamalai Agro (Rs 20), Torrent Pharma (Rs 6), EID Parry (Rs 6), L.G.Balakrishnan & Bros (Rs 5.50), Thirumalai Chem (Rs 5) and REC (Rs 6.75) were some of the companies to fix dates from January 1 till date as the ex-dividend dates.

The BSE corporate actions page contains the names of about 38 companies that have set ex-dividend dates from February 8 till the end of March. That many of them were making their second or third interim dividend payment indicated that they have got into the groove of making such interim payments which have buoyed the mood of their investors.

That the dividends received by investors were at their hands tax-free was the biggest benefit since the companies pay the Dividend Distribution Tax.

D. Balasundaram, former President, Coimbatore Stock Exchange and founder of Coimbatore Capital, said as far as the companies were concerned this was not of any special significance other than causing some additional paperwork. But for the investors this came as a boon.

Looking at the reasons for declaring interim dividends now, he said with the Budget just weeks away, there was a possibility that companies might want to beat the impact of any change in the IT rules governing dividend payment either at the company level or at the shareholder level. But this may not have a significant impact on retail investors whose shareholdings were small and hence the payout received would not be too high.

Balasundaram said another advantage of making interim dividend payments was this did not require the approval of the shareholders. But he pointed out that with the prices ruling high, the dividend yield in a good number of shares would not exceed 2-3 per cent.

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