Union Budget 2016‐17 proposed dividend distribution tax (DDT) of 10% on dividend income exceeding Rs 1 mn on individuals and firms. As per the government, DDT uniformly applies to all investors irrespective of their income slabs and this is perceived to distort the fairness and progressive nature of taxes. This proposal, if passed, would be applicable from 1st April 2016. In our opinion, dividend paying companies could opt to prepay their dividend timing to take advantage of this one month window.
We have attempted to prepare a list of companies who could declare dividend in this time and would also provide a decent dividend yield to investors. Here, we have assumed that the company would maintain its dividend per share ratio similar to FY15. We have also taken into consideration interim dividends that have been announced. Accordingly, even on remaining dividend (if interim dividend has been announced), these stocks could provide a dividend yield of more than 5%.