TCS Dividend Payment History Analysis and Insights
In this post I will talk about TCS dividend payment history and discuss how a carefully crafted dividend investing strategy can result in bumper yields, apart from capital appreciation.
A brief about TCS
Tata Consultancy Services (TCS) is India’s largest software company and also the most valuable company with market capitalization of Rs 4.88 lakh crore. TCS came out with an initial public offering (IPO) in August 2004, and since then has given two 1:1 bonus offerings. The unadjusted IPO price of Rs 850 translates to Rs 212.5. Since then the stock price has increased to Rs 2500, for an almost 10x or 26% CAGR in 10 years. But that is only one part of the story .. the other part is dividend.
The Year is 2005 ..
You have come back from USA after a 2-years stint. You are flush with money and you are itching to do something with your dosh, specifically Rs 3 lakhs. You have 4 options now:
a. invest the Rs 3 lakhs in a Fixed Deposit/ NSC or other government fixed income products
b. invest the money in stocks
c. online trading
d. spend it
In this article, I will take up the first 2 cases and show how investing in a “good” stock is better than a FD, even from a dividend point of view.
Here are the investment details:
| Date of Purchase | 31-Mar-05 |
| Price (Adjusted) | 270 |
| Shares | 1,111 |
| Investment | 300,000 |
TCS Dividend Payment History
Dividend is a perecntage of profit paid to a shareholder. If a company makes Rs 10 lakhs profit and decides to give back 60% to investors, the dividend is Rs 6 lakhs. If you own 10% of the company, you will get 10% of Rs 6 lakhs, that is Rs 60k.
A good company is expected to increase its profits. Hence it is expected that your dividedns will increase over a period of time.
Now TCS is a “good” company by almost all standards – its profits (EPS) and dividends (DPS) have goneup steadily over the years.
| Year | Dividend Per Share After Adjustments | Growth |
| 2006 | 3.4 | |
| 2007 | 3.3 | -4% |
| 2008 | 7.0 | 115% |
| 2009 | 7.0 | 0% |
| 2010 | 10.0 | 43% |
| 2011 | 14.0 | 40% |
| 2012 | 25.0 | 79% |
| 2013 | 22.0 | -12% |
| 2014 | 32.0 | 45% |
| 2015 | 79.0 | 147% |
Average yearly dividend growth has been 50%.
How much did you make?
The table below shows how much dividend income you made from 2006 to 2015. The column Dividend Yield on Cost (DYOC) is calculated as follows:
DYOC = Dividend in a Year/ Initial Investment
This is the same as interest rate of a fixed income product.
Interest Yield = Interest in a Year/ Initial Investment
| Year | DPS | Dividend | DYOC |
| 2006 | 3.4 | 3,750 | 1.3% |
| 2007 | 3.3 | 3,611 | 1.2% |
| 2008 | 7.0 | 7,778 | 2.6% |
| 2009 | 7.0 | 7,778 | 2.6% |
| 2010 | 10.0 | 11,111 | 3.7% |
| 2011 | 14.0 | 15,556 | 5.2% |
| 2012 | 25.0 | 27,778 | 9.3% |
| 2013 | 22.0 | 24,444 | 8.1% |
| 2014 | 32.0 | 35,556 | 11.9% |
| 2015 | 79.0 | 87,778 | 29.3% |
As you can see, the DYOC is only 1.3% in Year 1, but it goes up to a staggering 29% in Year 10. Which FD will give you 29% .. tell me, I am eager to listen.
Here is what you would have made had you invested the Rs 3 lakhs in a FD payig 8% per annum.
| Year | Rate | Interest |
| 2006 | 8% | 24,000 |
| 2007 | 8% | 24,000 |
| 2008 | 8% | 24,000 |
| 2009 | 8% | 24,000 |
| 2010 | 8% | 24,000 |
| 2011 | 8% | 24,000 |
| 2012 | 8% | 24,000 |
| 2013 | 8% | 24,000 |
| 2014 | 8% | 24,000 |
| 2015 | 8% | 24,000 |
Now comes the best part …
We have seen TCS Dividend Payment History above. What if we now try to forecast the estimared dividends for next 10 years. To keep things simple, we will simply assume a very low conservative 10% growth from 2016 to 2025.
| Type | Year | DPS | Dividend | DYOC | FD Interest |
| Actual | 2006 | 3.4 | 3,750 | 1% | 8% |
| Actual | 2007 | 3.3 | 3,611 | 1% | 8% |
| Actual | 2008 | 7.0 | 7,778 | 3% | 8% |
| Actual | 2009 | 7.0 | 7,778 | 3% | 8% |
| Actual | 2010 | 10.0 | 11,111 | 4% | 8% |
| Actual | 2011 | 14.0 | 15,556 | 5% | 8% |
| Actual | 2012 | 25.0 | 27,778 | 9% | 8% |
| Actual | 2013 | 22.0 | 24,444 | 8% | 8% |
| Actual | 2014 | 32.0 | 35,556 | 12% | 8% |
| Actual | 2015 | 79.0 | 87,778 | 29% | 8% |
| Forecast | 2016 | 86.9 | 96,556 | 32% | 8% |
| Forecast | 2017 | 95.6 | 106,211 | 35% | 8% |
| Forecast | 2018 | 105.1 | 116,832 | 39% | 8% |
| Forecast | 2019 | 115.7 | 128,515 | 43% | 8% |
| Forecast | 2020 | 127.2 | 141,367 | 47% | 8% |
| Forecast | 2021 | 140.0 | 155,504 | 52% | 8% |
| Forecast | 2022 | 153.9 | 171,054 | 57% | 8% |
| Forecast | 2023 | 169.3 | 188,159 | 63% | 8% |
| Forecast | 2024 | 186.3 | 206,975 | 69% | 8% |
| Forecast | 2025 | 204.9 | 227,673 | 76% | 8% |
As you can see, you will earn a massive dividend of Rs 2.25 lakhs on a 3 lakh investment in 2025! The yield on cost in 2025 is a massive 76% ..
And this is apart from your capital appreciation – your share price has already gone up 10x times.
Conclusion
As we can see from this TCS Dividend Payment History analysis, a carefully crafted dividend investing stratgey can result in bumper yields, apart from capital appreciation. The key is to select a “good” company – one with strong management, high ROEs, low debt, growing sector and conservative capital allocation strategy.
You may also like
- 3 Ways to Calculate Dividend Growth Rate
- Dividend Analysis of Tata Investment Corporation
- Franklin India Bluechip Fund Analysis
- HDFC Equity Fund Analysis
- Long Term Equity Investment is the Best Option
References
- http://www.tcs.com/investors/investor-faq/Pages/default.aspx
- http://www.moneycontrol.com/india/stockpricequote/computers-software/tataconsultancyservices/TCS
A Few Last Words
Before making any investment decision, please contact your financial adviser.
I am not registered with SEBI under SEBI (Research Analysts) Regulations, 2014. I do not offer any opinion concerning securities or public offers. Whatever analysis I provide is through public media only on Mkerj. I am not covered under RA Regulations.
I have provided this article for educational purpose only.
I hope you found this article on TCS Dividend Payment History useful. If you have something to add please leave a comment in the post. Please feel free to contact me.
sir…your analysis is simply superb
Thank you Mehul Bhai .. so glad you liked it.
Nice article. Quite useful.
Good going Mr. M!
Thank you Sir.