47 dividend-paying companies clock 45% returns on SME platform

Mumbai: Dividend givers seem to be outperforming the others on the SME platform: On the Main Board, however, growth companies typically do just the opposite, outrunning dividend payers.

An ET study shows 47 dividend paying companies on the SME platform have clocked 45 per cent average returns from the date of listing to date. By contrast, non-dividend paying companies could fetch 25 per cent on an average.

Notably, of 363 companies listed on SME platforms excluding those migrated on to the Main Board, 47 have paid dividend in FY18. Further, out of a total pool of dividend paying companies, stocks of 68 per cent issuers trade above the IPO price, whereas only 52 per cent of the non-dividend paying companies are trading above IPO price.

In comparison with the BSE Small Cap Index companies, out of 855 members, 511 have declared dividends, representing 60 per cent of the total. The overall BSE SME Small Cap Index has clocked 16 per cent CAGR returns over a period of last 3 years. This shows that SME companies are catching up with larger board.

Companies like Zota Health Care, RKEC Projects and Shrenik paid Rs 5.26 crore, Rs 2.4 crore and Rs 2.04 crore as dividend last year.

It is a matter of debate whether high-growth companies should declare dividends or plough back earnings for wealth optimization, but experts believe dividend payment would boost investor confidence.

“It is heartening to note SME companies declaring dividend payouts in reasonably handsome numbers. In a poll conducted by us on Twitter, 44 per cent votes were in favour of dividend declaration,” said Mahavir Lunawat, managing director, Pantomath Capital Advisory Services Group. “Certainly, dividend declaration helps build investor confidence and reflects positively on management intention.”