The tough macroeconomic environment acted as a deterrent for Indian equities with only 15 of the top-50 companies outperforming the benchmark NSE Nifty in 2013.
The underperformance of some of the bluechip companies in terms of capital gains was so severe that they failed to outdo the index in terms of total returns that account for dividend income from a stock over and above its price appreciation.
When compared with the yardstick of total returns, only 11 of the 50 large caps managed to outperform the Nifty though as many as 15 outperformed the index in terms of annual price gains.
The healthy dividend payout of seven of the prominent public sector companies, including Bharat Petroleum Corporation Ltd (BPCL), NMDC Ltd, NTPC and Coal India, could not help them beat the market returns as these policy sensitive companies witnessed substantial decline in their stock prices during 2013.
The dividend paid by each of these four companies grew by more than 40% during 2013. The cash dividend received by BPCL investors doubled from last year to Rs 11 per share. While the BPCL stock plunged 2.4%, NMDC and NTPC lost 12% and 18%, respectively, in 2013.
Even public sector lenders Bank of Baroda and Punjab National Bank did not report strong total returns in the year even as dividends paid to shareholders jumped 26% and 23% to Rs 21.5 and Rs 27 a share, respectively, in 2013. The share prices of these PSBs declined by more than a fourth in 2013.
While the dividend paid by Hero jumped 33% to Rs 60 in the calendar year, its total return for the year stood at 12.3% against 16.9% for the Nifty.
The dividend receipts from ONGC and HUL in 2013 were down nearly 30% compared to last year, in turn, dwarfing their total returns against the benchmark. Both HUL and Hero have maintained an average payout ratio — the percentage of earnings distributed to shareholders as dividends — of 81% and 77% in the five fiscals ended 2012