Indian companies handed higher aggregate dividends in 2025-26, but the growth in payouts slowed as boards retained a larger share of earnings amid uncertainty over business conditions and investment plans fuelled by the war in West Asia. According to a Mint analysis of BSE 500 companies based on unaudited results and including proposed dividends, aggregate payouts rose 8.2% year-on-year to ₹5.13 trillion in FY26, slowing from an 11.9% increase in FY25 when payouts stood at ₹4.74 trillion. Predictably, cash-rich companies such as Tata Consultancy Services Ltd, ITC Ltd, and Coal India Ltd led shareholder payouts among India's 500 largest listed firms.
The dividend payout ratio—the proportion of earnings distributed to shareholders—fell to 27.6%, its lowest level in 12 years, from 30.4% in FY25, suggesting that dividend growth is being driven by a narrow group of cash-rich companies. As reported by Mint, the payout ratio has broadly trended lower in recent years, declining from 36.5% in FY23 to 30% in FY24, edging up to 30.4% in FY25 and then dropping to 27.6% in FY26. The latest reading is substantially below the 12-year average of around 35.5%. Tanvi Kanchan from Anand Rathi Shares & Stock Brokers noted that FY26's moderation in dividend growth partly reflects the absence of special payouts seen in FY25 and a conservative reset in per-share dividend policies amid uncertain earnings visibility.
Dividend payouts remained concentrated among a small group of cash-rich companies, with the six biggest payers accounting for more than a quarter of the total. According to Mint analysis, Tata Consultancy Services led the pack with a payout of ₹39,820 crore in FY26, followed by HDFC Bank with ₹23,860 crore, Infosys distributing ₹19,459 crore, and ITC paying ₹18,168 crore. Oil and Natural Gas Corp. and Coal India paid ₹16,669 crore and ₹16,485 crore, respectively. Together, these six companies distributed about ₹1.34 trillion, or roughly 26% of the aggregate dividends paid by the BSE 500 companies, with TCS alone accounting for nearly 8% of the total.
Buyback activity has picked up sharply in 2026, with companies announcing offers worth ₹24,950.69 crore as of 24 July, the highest since 2023 and already exceeding the 14 issues worth ₹19,711.71 crore recorded in 2025, according to primedatabase.com. As reported by Mint, several large-cap companies now prefer buybacks over dividends for tax and confidence-signaling reasons, with Tanvi Kanchan noting that a low payout ratio doesn't always mean lower total shareholder returns. Rajesh Singla from Alpha AMC described the decline in the payout ratio as a sign of capital discipline rather than corporate distress, stating that companies may be retaining earnings for capital expenditure, deleveraging and acquisitions.
The outlook for FY27 payouts will likely depend on several factors, including whether recent profit decline was concentrated in cyclical sectors such as commodities, oil marketing and metals, and whether that base normalizes. According to Mint analysis, planned FY27 capex is already down 16.5% from FY26 based on NSO data, while non-financial firms in the sample saw cash reserves grow by roughly 13% in FY26, down from nearly 15% in the previous fiscal. Kanchan noted that rising concentration alongside a 12-year-low payout ratio suggests dividend growth is being driven by a narrow group of cash-rich companies, while the broader market is pulling back, pointing to weakening breadth even if the top payers remain financially healthy.
