Boosting Dividends: CPSEs' Impact on Investors and Fund Portfolios

The Department of Investment and Public Asset Management is urging mutual fund houses to include more stocks from public sector companies in their portfolios. With CPSEs paying a record-high dividend, the government aims for common investors to benefit from improved corporate performance. CPSEs make up 25% of total dividend payouts.

The Department of Investment and Public Asset Management (DIPAM) is encouraging mutual fund houses to diversify by incorporating more stocks from public sector companies into their portfolios. Secretary Arunish Chawla revealed this initiative on Wednesday, citing a significant increase in dividend payouts by Central Public Sector Enterprises (CPSEs) reaching Rs 1.50 lakh crore in the 2024-25 fiscal year.

Chawla emphasized the government's interest in allowing common investors to enjoy the benefits of enhanced corporate performance through these dividends. In the fiscal year 2024-25, CPSEs have paid the government a dividend of Rs 74,016.68 crore, a noticeable rise from Rs 63,748 crore in 2023-24 and Rs 59,533 crore in FY23.

As CPSEs constitute 10% of the total market capitalization but contribute to 25% of overall dividend payouts, Chawla plans to meet mutual fund managers to advocate for a broader inclusion of CPSE stocks, thereby enabling value creation for senior citizens and minority shareholders. Furthermore, private sector companies are also encouraged to offer fair dividends to their minority shareholders.

(With inputs from agencies.)