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A STUDY on BEHAVIOUR PATTERN of DIVIDEND PAY-OUT: SELECTED BLUE-CHIP COMPANIES in INDIA Author Co - Author Dr.K.R.Sivabagyam A.Ranjitha Assistant Professor K

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A STUDY on BEHAVIOUR PATTERN of DIVIDEND PAY-OUT: SELECTED BLUE-CHIP COMPANIES in INDIA Author Co - Author Dr.K.R.Sivabagyam A.Ranjitha Assistant Professor K Compliance Engineering Journal ISSN NO: 0898-3577 A STUDY ON BEHAVIOUR PATTERN OF DIVIDEND PAY-OUT: SELECTED BLUE-CHIP COMPANIES IN INDIA Author Co - Author Dr.K.R.Sivabagyam A.Ranjitha Assistant Professor K. Madhu Varshini Department of Commerce N.Deekshithaa Sri Krishna Arts and Science College S. Kabilambika E-mail Id: [email protected] II M.Com Students MOB: 7871809789 E-mail Id: [email protected] [email protected] [email protected] [email protected] Mob: 9486939255; 9715184177; 9025868186 ABSTRACT Reliance Industries, Tata Consultancy services (TCS) and WIPRO in India and The term blue-chip was used to describe observe the behaviour pattern of the three high- priced stocks in 1923 when Oliver measures of dividend policy of the blue- Gingold, an employee at Dow Jones chip companies in India. observed certain stocks trading at $200 or more per share. Poker players bet in blue, KEYWORDS: Blue Chip Companies, white and red chips with blue chips having Dividend Policy, Investment Proposals. more value than both red and white chips. INTRODUCTION Today, blue chips stocks don’t necessarily refer to stocks with a high price tag, but In the exchange of India there are literally more accurately to stocks of high-quality thousands of companies but when it comes companies that have with stood the test of to financial stability only few companies time. A blue-chip company is a are financially stable and in other financial multinational firm that has been in aspects. Long term investors seek out for operation for a number of years. Blue chip stable companies for their investments. So companies are business that investors see their investments don’t become sour as reliable and profitable. Not only do companies which can withstand such huge these companies operate profitably in good investors is known as blue chip companies. times but also in bad times. Additionally, The name blue chip was derived from the they more likely to survey market game poker in which the blue chips have fluctuations. In other words, they are large the highest value. In the year 1923 blue and extremely credit worthy businesses. A chip were first used to describe high priced blue-chip company is famous for the stocks. Blue chips stocks dose not refer to quality and wide acceptance of its stock with a high price tag but also more products. Additionally, people know it accurately refers to stocks of high quality always makes money and pays dividends. companies that withstood the test of time. Objective of the study is to calculate the These stocks are highly liquid since they three measures of dividend policy of the are frequently traded in the market by five selected blue-chip companies’ individual and institutional investors alike. imperial tobacco company of India limited These stocks cost high as they have a good (ITC), Hindustan Unilever limited, reputation and are often market leaders. Volume 12, Issue 4, 2021 Page No: 98 Compliance Engineering Journal ISSN NO: 0898-3577 An investor who needs cash on a whim can as the 'Imperial Tobacco Company confidently create a sell order for their of India Limited', the company was stock knowing that there will be always a renamed as the 'India Tobacco buyer on the end of the transaction. Company Limited' in 1970 and Conservative investors with a low risk later to 'I.T.C. Limited' in 1974. profile or nearing retirement can invest in The dots in the name were removed blue chip stocks. These stocks are great for in September 2001 for the capital preservation and their consistent company to be renamed as 'ITC dividend payments they also protect the Limited' where 'ITC' would no portfolio against inflation. Blue chip longer be an initialize. The stocks are less volatile investments than company completed 100 years in owning shares in companies without blue 2010 and as of 2012–13, had an chip status because they have an annual turnover of US$8.31 billion institutional status in the company. They and a market capitalization of are financially strong with a track US$52 billion. It employs over recording of producing earnings with a 30,000 people at more than 60 moderate amount of debt they also have a locations across India and is part of strong name in its industry with dominant Forbes 2000 list. products or services. These are the companies that are large corporations that Hindustan Unilever Limited (HUL) have been in business for many years, and is a British-Dutch manufacturing are very stable. company headquartered in Mumbai, India Its products Blue chip companies are the companies include foods, beverages, cleaning with little debt or no debt, large market agents, personal care products, capitalization, stable debt equity ratio, high water purifiers and consumer return on equity (ROE) and return of asset goods. (ROA). The solid balance sheet fundamentals aligned with the high Reliance Industries Limited is an liquidity have earned all blue-chip stocks Indian multinational conglomerate the investments grade bond ratings. In his company headquartered in book, Benjamin graham says that the Mumbai, Maharashtra, India. consecutive investors should look for Reliance owns businesses across companies that has paid dividend for India engaged in energy, consistently for 20 years. An investor can petrochemicals, textiles, natural track the performance of blue chip stocks resources, retail, and through a blue chip index, which can also telecommunications. be used as an indication of industry on Tata Consultancy Services is an economy performance and that’s what the Indian multinational technology SENSEX exactly does. company that specializes in ITC Limited is an Indian information technology services multinational conglomerate and consulting, headquartered in company headquartered in Kolkata, Mumbai, Maharashtra, India and West Bengal. Established in 1910 Volume 12, Issue 4, 2021 Page No: 99 Compliance Engineering Journal ISSN NO: 0898-3577 has its largest workforce based in (Faris Nasif AL-Shubiri, 2012) Chennai, Tamil Nadu, and India. examined 60 industrial firms listed on Amman stock exchange to Wipro Limited is an Indian understand the dividend payment multinational corporation that behavior. The result shows that provides information technology, probability of dividend payment consulting and business process increases with the profitability and services. It is headquartered in Bangalore, Karnataka, India. In firm size. He concluded that 2013, Wipro separated its non-IT determinant of dividend policy are businesses and formed the the same in Jordan economy as that privately owned Wipro Enterprises. of developed economy. LITERATURE REVIEW (Nuraddeen Usman Miko and Hasnah Kamardin, 2015) examined the effect of ownership structure on corporate dividend (Joshi, 2011) examined the impact policy in Nigeria. The study of dividend policy on stock prices revealed that ownership structure in Nepal. The selected sample was has a significant impact on of 210 companies comprising dividend payout. The higher the banking and non-banking sector. institutional and block-holders Dependent variable was current shareholdings, higher will be the stock price and four other variables rate of dividend. were taken as independent namely (Fawaz Khalid Al- Shawawreh, dividend per share, lagged price 2014) examined 53 listed earnings ratio, lagged market price companies of Jordan to establish per share and retained earnings per relationship between dividend share. The result shows that payout and share price volatility. dividend per share is a motivating With the help of multiple factor and has strong impact on regression analysis he concluded market price per share of the that there is a significant impact of banking and non-banking firms. It dividend yield on share price. is also analyzed that dividend per share has greater impact on stock (Sobha rani and Patha Sarathi, prices than retained earnings per 2013) focused on the determinants share. In short, the study concluded of dividends and itsperformance of that both dividend and retained select pharmaceutical companies in earnings per share affect stock India. This study evaluates the prices of banking and non-banking performance of various sector. pharmaceutical companies and their annual compound growth rate. (R.Sucharitha, 2010) in her study entitled “Dividend and Dividend Volume 12, Issue 4, 2021 Page No: 100 Compliance Engineering Journal ISSN NO: 0898-3577 Policy: An Empirical Study in specific purpose in the study. Secondary India Pharmaceutical Industry” data has been obtained by the website. For states that a sound financial the purpose of this study the five blue chip performance in a pharmaceutical company. Research is a systematic and company can be determined by the continues method of defining a problem, measure of its dividend payout collecting the facts and analyzing them, features. This again refers to two reacting conclusion forming basic objectives of a firm i.e., generalizations. Research methodology is maximizing the wealth of the a way to systematically solve the problem. firm’s owners and providing Sample company selected for this study: sufficient funds to finance its growth. Therefore, it could be Company Year of Market concluded that ultimate dividend S.n Name Establishme Capitalizatio o nt n (Rs.Cr.) policy of any company depends on 1 Imperial 24 August 256,065 numerous factors. Tobacco 1910 Company OBJECTIVES OF THE STUDY Limited 2 Hindustan 1933 510,041 Unilever In the present study an attempt has been Limited
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