The breaking news states that Raamdeo Agrawal, joint managing director and co-promoter, Motilal Oswal Financial Services, has recently said in a press release that there should be a regulatory mandate of ‘minimum dividend obligation’ (MDO) for firms, on the same basis of the rules in Brazil, to facilitate the Indian market attract more investors.
While underlining the hypothesis that higher dividend payouts turn better valuations for companies as well as that blue-chips do it better, Agrawal exhorted investors to zero in on blue-chip stocks.
While talking to media, Mr. Agarwal said, “Many promoters feel comfortable in retaining most of their profits for saving on the tax outgo and reinvestment. But some investors prefer higher dividends for they expect returns on their investment for meeting their financial commitments.”
In the meantime, companies have to pay a dividend distribution tax of 15 percent of total dividend distributed, presently.
According to Mr. Agarwal, “Actually minority investors should have a say on the issue of dividend distribution along with the promoters.”