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    Case Study On Dividend Policy On Infosys

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    Vaidyanathan Ravichandran
    Infosys adopted a continuously growing dividend policy since becoming a public company in 1992, paying out between 10-14% of net profits initially. In 2004, Infosys set a record with a 2,590% dividend payout including a special 2,000% one-time dividend when revenues crossed $1 billion. Infosys has rewarded shareholders over the years with increasing cash dividends, bonus shares, and special dividends as the company's earnings and revenues have grown exponentially.

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    Case Study On Dividend Policy On Infosys

    Uploaded by

    Vaidyanathan Ravichandran
    3K views7 pages
    Infosys adopted a continuously growing dividend policy since becoming a public company in 1992, paying out between 10-14% of net profits initially. In 2004, Infosys set a record with a 2,590% dividend payout including a special 2,000% one-time dividend when revenues crossed $1 billion. Infosys has rewarded shareholders over the years with increasing cash dividends, bonus shares, and special dividends as the company's earnings and revenues have grown exponentially.

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    Case Study on Dividend Policy on Infosys

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    Case Study on Dividend Policy on Infosys

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    Infosys adopted a continuously growing dividend policy since becoming a public company in 1992, paying out between 10-14% of net profits initially. In 2004, Infosys set a record with a 2,590% dividend payout including a special 2,000% one-time dividend when revenues crossed $1 billion. Infosys has rewarded shareholders over the years with increasing cash dividends, bonus shares, and special dividends as the company's earnings and revenues have grown exponentially.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    3K views7 pages

    Case Study On Dividend Policy On Infosys

    Uploaded by

    Vaidyanathan Ravichandran
    Infosys adopted a continuously growing dividend policy since becoming a public company in 1992, paying out between 10-14% of net profits initially. In 2004, Infosys set a record with a 2,590% dividend payout including a special 2,000% one-time dividend when revenues crossed $1 billion. Infosys has rewarded shareholders over the years with increasing cash dividends, bonus shares, and special dividends as the company's earnings and revenues have grown exponentially.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
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    The key takeaways are that Infosys has consistently grown its dividend payouts over time in line with its strong financial performance and it has rewarded shareholders through regular cash and bonus dividends.

    Infosys' dividend policy has evolved from paying 10-14% of net profits until 1999 to significantly higher payouts, including a record 2,590% dividend in 2004 that included a special 2,000% payout when revenues crossed $1 billion.

    Infosys' largest dividend payout was 2,590% in 2004, which included a special one-time dividend of 2,000% paid as the company crossed the $1 billion revenue mark.

    Case Study on Dividend

    Policy on Infosys
    Infosys – Dividend Policy
    • Infosys became a public limited company under the name of Infosys
    Technologies Limited in June 1992. Infosys is a debt-free company as it
    generates sufficient cash to finance all its operational and investing
    requirements.
    • The company has grown exponentially since its inception, and has happily
    shared its success with its investors by adopting a continuously growing
    dividend policy.
    • The dividend payout trend at Infosys was around 10 per cent to 14 per cent
    of its net profits till 1999.
    • In 2000, the company declared an interim dividend of INR 2.50 per share of
    par value of INR 5 each, (50 per cent of the face value). In 2001, it declared
    a record interim dividend of INR 7.50 per share (150 per cent).
    Infosys – Dividend Policy contd.
    • In 2004, the company created history by making a record dividend
    payout of 2,590 per cent to its shareholders. This included a special
    one-time dividend of 2,000 per cent and a regular dividend of 590 per
    cent.
    • This was the single biggest dividend payout by any Indian private
    enterprise. The special dividend of 2,000 per cent was a one-time
    payment as the company crossed the USD1billion mark in revenues.
    Besides the cash dividend, the company also paid a bonus of 3:1
    stock.
    • In 2005, Infosys declared a final dividend of INR 6.50 per share (130
    per cent). Along with the interim dividend of INR 5 per share (100 per
    cent), the total dividend for the financial year 2005 amounted to INR
    11.50 (230 per cent), amounting to a total distribution of INR 3.098
    billion.
    • The company crossed the USD 2 billion revenue mark in 2006, and it
    rewarded its shareholders with a 1:1 bonus and a special silver-jubilee
    dividend of INR 30 per share, which amounts to 600 per cent on a par
    value of INR 5 each. In 2007, it declared a dividend of INR 6.5 per
    share (130 per cent on a par value of INR 5 per share).
    • An interim dividend of INR 5 per share (100 per cent) was also
    distributed. The total dividend inclusive of dividend tax was 19.9 per
    cent, compared to 19.4 per cent in the previous year (2006).
    • For the financial year 2008, the board of directors recommended a
    final dividend of INR 7.25 per share, amounting to INR 4.15 billion.
    • The company's board also recommended a special dividend of INR 20
    per share, amounting to INR 11.44 billion.
    • Including the interim dividend of INR 6 per share, amounting to INR
    3.43 billion, the total dividend recommended for the year comes to
    INR 33.25 per share, amounting to INR 19.02 billion
    • Besides cash dividends, Infosys has also been distributing bonus
    shares as dividends in kind. Bonus dividends distributed over the
    years was 1:1 in 2006, 3:1 in 2004, 1:1 in 1999, 1:1 in 1997 and 1:1 in
    1994.
    • Infosys is an example of a company that has increased its dividend
    payments with growth in its earnings.
    • It is evident from its dividend policy that its dividend payouts are
    linked to its financial performance. The company has been paying
    dividends continuously since 1994, and its shareholders have been
    adequately compensated with increasing dividends and regular bonus
    issues.

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