There is good news for investors who invest in the stock market's top companies. According to a report, 75 of the top 500 companies of BSE could give a dividend of 1.10 lakh crore to shareholders through dividend or buyback (repurchase). These companies have large cash holdings and can distribute about half of their on-balance-sheet cash to shareholders, as dividends or buybacks.
According to the news agency PTI, the cash available for distribution 1.10 lakh crore is equal to profit after tax of 75 companies and it is more than Rs 62,100 crore given in the last financial year as a dividend."
The consulting company Institutional Investor Advisory Services India has concluded this study by studying the results of these 500 companies in the last financial year. In the last year's report, the company had identified 92 companies, which could give a dividend of Rs 34 thousand crores.
What is the dividend
A dividend is the share of partners in the benefit of any company, which company gives to its shareholders on profit making. Dividends in a joint stock company are available on the basis of Fixed Price or Base Price. In this case, the shareholder receives the dividend in proportion to his share. The board of directors of the company determines how much to pay dividends. However, shareholders also stamp it according to their voting rights.
What is buyback
When a company relies on the strength of its shares, then company buybacks or repurchase shares to shareholders. The company thus reduces the number of shares available in the open market and increases the share of promoters. There are many reasons for the company to buyback. There is also an attempt to increase the value of shares in this way because the supply of shares in the open market decreases and demand is high.