FY24 dividend income: Promoters and top business families beat govt

Dividends and proceeds from share buybacks by individual promoters and prominent business families in India in 2023-24 were once again higher than the Government of India’s earnings from listed central public-sector undertakings (CPSUs) or multinationals’ earnings from their listed subsidiaries and associate companies in India.
 

Individual promoters and promoter families together earned around Rs 1.064 trillion through dividends and proceeds from share buybacks from their listed companies in FY24, up just 0.2 per cent from a year ago.
 

Promoter families’ earnings in FY24 were, however, nearly 28 per cent higher than the government’s estimated dividends of around Rs 82,900 crore from listed CPSUs such as Oil and Natural Gas Corporation, Indian Oil, Coal India, State Bank of India, Life Insurance Corporation, Power Grid Corporation, NTPC, and Bank of Baroda.
 

The government’s dividend was, however, up 35 per cent year-on-year in FY24 from Rs 61,409 crore a year ago.
 

In comparison, multinationals such as Unilever Plc, Suzuki Motor Corp, British American Tobacco, Nestle SA, and Colgate-Palmolive Inc earned Rs 27,710 crore as dividend from their listed subsidiaries and associates in India, up 11.2 per cent from the Rs 24,907 crore in FY23.
 

With this, the dividend of promoter families has been higher than that of the government for six consecutive years. The earnings of promoter families such as the Tatas, and those of Azim Premji, Shiv Nadar, Mukesh Ambani, and Anil Agarwal were ahead of the government’s earnings for the first time in FY19.
 

In comparison, the multinationals’ combined earnings from their Indian subsidiaries and associates have always been much smaller. (See the adjoining charts.)
 

The higher income of promoter families has been attributed to large dividend payouts and share buybacks by IT services majors such as Tata Consultancy Services, Infosys, Wipro, HCL Technologies, and Tech Mahindra. These five IT services majors were among the four biggest dividend payers, including expenditure on share buybacks, in FY24.
 

A majority of the cash-rich companies in IT services are owned and promoted by individuals and families. In comparison, there is no government presence in this space. Government-owned companies operate largely in capital-intensive sectors such as banking and insurance, oil and gas, and power, mining and metals.
 

In the last five years, dividends and the proceeds from share buybacks of promoter families have increased at a compound annual growth rate of 16.82 per cent, which is slower than the multinationals’ dividend income growth of 17.2 per cent but faster than the government’s dividend income growth of 13.7 per cent in the period.

The government, however, narrowed the gap in dividend earnings with promoter families in FY24. There was a slowdown in the dividend earnings of promoter families in FY24, while the government saw a big jump in earnings thanks to higher payouts by public-sector banks and oil and gas firms.
 

Some prominent CPSUs that paid a higher dividend in FY24 include Indian Oil Corporation, State Bank of India, Bharat Petroleum Corporation, Life Insurance Corporation, Power Finance Corp and Bank of Baroda among others.
 

Similarly, multinationals such as Suzuki Motor Corporation, Nestle SA, Nippon Life Insurance Co, Abbott Laboratories, Cummins Inc and ABB saw strong double-digit growth in dividend from their listed subsidiaries in India in FY24.