FY25 dividend payouts: Cash-rich BFSI and IT companies dominate

Mumbai, June 30, 2025:
India Inc. is off to a strong start in FY25 on the dividend front, with cash-rich firms in the BFSI (banking, financial services, and insurance) and IT (information technology) sectors emerging as top contributors to shareholder rewards. Buoyed by solid earnings, robust cash flows, and sustained investor demand for yield in a volatile market environment, several blue-chip firms have declared or proposed substantial dividend payouts in Q1 FY25.

BFSI Sector Leads Dividend Payouts

Banking and financial services companies are topping the charts, driven by record profits, healthy credit growth, and improved asset quality.

HDFC Bank, India’s largest private sector lender, declared a final dividend of ₹19 per share, translating into a yield of 1.5% at current market prices. State Bank of India (SBI) followed with a dividend of ₹12.50 per share, reflecting a strong operational performance and government’s intent to enhance shareholder returns.

“In the wake of elevated net interest margins and controlled slippages, most large banks are sitting on strong capital buffers and excess liquidity,” said Neeraj Jha, head of research at a Mumbai-based brokerage. “Dividend declarations are a clear signal of balance sheet confidence.”

Life insurers like LIC and non-banking financial companies (NBFCs) such as Bajaj Finance and HDFC Ltd. (now part of HDFC Bank post-merger) have also participated in the dividend rush, maintaining payout consistency.

IT Giants Return Capital to Shareholders

India’s information technology bellwethers continued their tradition of generous capital distribution. Tata Consultancy Services (TCS) announced a total dividend of ₹54 per share for FY25 so far, including a special dividend, while Infosys paid ₹38 per share, maintaining a 70% payout ratio.

“Cash-rich IT companies are opting for higher dividends in addition to buybacks, given the lower capex intensity and predictable cash generation,” said Anjali Menon, tech sector analyst at Quantum Securities. “This trend appeals to both long-term investors and yield-seeking institutions.”

Mid-cap IT names like Persistent Systems, L&T Technology Services, and Coforge have also enhanced payouts in FY25, reflecting confidence in deal pipelines despite global macro uncertainties.

Dividend Yield Gains Traction Amid Market Volatility

With the Nifty50 witnessing bouts of volatility in the first quarter of FY25 due to geopolitical tensions and mixed global cues, dividend-paying stocks have emerged as a safe haven.

“Stable dividend yield is acting as a cushion in portfolios, especially when growth stocks are under pressure,” said Ritesh Shah, a fund manager at Axis Mutual Fund. “BFSI and IT offer a rare mix of earnings visibility, strong ROE, and shareholder returns.”

According to exchange data, the total dividend payout by Nifty50 companies in Q1 FY25 stood at over ₹78,000 crore, up 15% year-on-year. BFSI and IT sectors accounted for more than 60% of this amount.

Capital Allocation Discipline in Focus

One of the key drivers of higher dividends is a shift in capital allocation strategy. With limited room for expansion in certain mature sectors, companies are choosing to return surplus cash to shareholders.

“The idea is not just to reward shareholders but also to demonstrate capital efficiency and long-term discipline,” said Vinay Bhatia, equity strategist at Edelweiss. “Consistent and predictable dividend policies also attract global funds looking for stability.”

In line with this, ICICI Bank, which has traditionally been conservative with payouts, announced a higher dividend of ₹9 per share this year. Similarly, Wipro and Tech Mahindra also raised dividends, indicating a trend reversal from the COVID-era caution.

Dividend Outlook for Rest of FY25

Analysts remain bullish on dividend payouts for the remainder of the financial year. With healthy corporate earnings expected from domestic-focused sectors and moderation in capex across IT and BFSI, free cash flows are likely to stay strong.

However, some caution is warranted. “If global demand softens significantly or margin pressures emerge, some IT companies might moderate payouts in the second half,” warned Amrita Desai, a senior economist at ICRA. “But core companies with annuity revenue and surplus reserves should continue distributing dividends.”

Investor Outlook: A Yield-Driven Strategy

For retail and institutional investors, high dividend-paying companies have become a cornerstone of portfolio strategies, particularly in uncertain macro environments.

“As interest rates plateau and fixed income returns normalize, quality dividend stocks become a viable alternative,” said Siddharth Jain, portfolio manager at Motilal Oswal PMS. “It’s not just about yield but also about the quality of the business behind the dividend.”

Market experts suggest that long-term investors focus on dividend consistency, payout ratio, and earnings sustainability rather than chasing high yields in isolation.

The first quarter of FY25 has firmly established BFSI and IT as the twin engines of dividend growth in India’s corporate landscape. With investor appetite for stable returns growing and companies demonstrating financial prudence, dividend payouts are likely to remain a key theme in the months ahead.

For yield-conscious investors and those seeking income amid volatility, India's dividend landscape—particularly led by banking and technology giants—offers a promising horizon.