Power of dividend income

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One of the technology companies listed in the Indian National Stock Exchange (NSE) delivered a per-share dividend of 36 INR (0.48 USD) to its shareholders in the year 2021. Out of the 271 crores (2,710 million) outstanding shares, the promoters group owns 60.33% which is ~163 crores (1,630 million) shares. If you do the simple math, 163 x 36 ~5900 crores INR (787 million USD) in dividend income. That is the power of owning an established well-run business.

So, the obvious question is what is the use of knowing how much promoters earned? The point I am making is very simple. If you cannot start a business, own a piece of these kinds of business by buying their shares where you can reap the benefit from both capital appreciation and dividend income.

A few of the key elements to find a well-run franchise are:-

  1. Clean accounts and good corporate governance. 
  2. Ability to generate a return on capital employed substantially higher than the cost of capital. 
  3. Sustainable competitive advantage with its peers. 

If you are interested in investing, please refer to my blog on fundamental rules on personal finance before getting started.

For further clarification and/or personal consultations: fill out this google form (click here).

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I hope you liked this blog post. Feel free to provide your comments and feedback and I am open to having any conversation regarding the same. Thank you for your time and support!

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