IRFC Dividend History

Dividends represent a portion of a company’s profits distributed to shareholders, serving as a key indicator of financial health and investor confidence. Over the past four years, Indian Railway Finance Corporation (IRFC) has built a solid track record of rewarding its shareholders with consistent dividends. These dividends have come in various forms, such as cash and shares, reflecting the company’s commitment to sharing its success. In this blog, we’ll take a closer look at IRFC’s dividend history, including key record dates, announcements, and the factors influencing its payouts

IRFC Dividend History: Record Dates

The table below shows the IRFC dividend payout history

What are Dividends in Stocks?

Dividends in stocks are payments made by a company to its shareholders, mainly in the form of cash or additional shares, as an appreciation of their investment in the company. They are a portion of the profits that the company makes, but they may be distributed at fixed periods; the most common period of distribution is quarterly. Not all companies declare dividends; some prefer to reinvest their profits for growth. The prospect of dividends makes it attractive to income-focused investors as they offer a stable return above any eventuality regarding the potential gain in the stock price.

IRFC Dividend Policy

The Indian Railway Finance Corporation (IRFC) has formulated its Dividend Distribution Policy in line with SEBI’s regulation which requires the top 500 listed companies based on their market cap to formulate the dividend distribution policy. The policy intends to promote fairness and openness in dividend distribution, shareholder appeasement, and the company’s need for growth and expansion in the long run.

The Board of Directors at IRFC makes a proposal on the Dividend based on several financial parameters and internal and external factors and directives from the Department of Investment and Public Asset Management (DIPAM). There is a statutory obligation requiring all Central Public Sector Enterprises (CPSEs) to disburse a minimum of 30% of their post-tax profits (PAT) or 5% of their net assets value, whichever is greater as dividends annually.

Furthermore, some of the other aspects that determine the dividends are among others debt-equity ratio, the amount of long-term debt, profits, and prevailing economic conditions. The profits that are not paid out as dividends are primarily utilized for reinvestment to expend further resources which is in line with the IRFC’s goal of expanding the financial-economic network of railway infrastructure and its institutions.

IRFC’s policy reflects its commitment to maintaining a balance between rewarding shareholders and sustaining its financial health for future expansions.

Trends in IRFC Dividend Payout

Here is a trend line graph displaying IRFC's dividend history and net profit from March 2013 to March 2024. The graph shows a significant increase in net profit over the years, particularly after 2018. Meanwhile, the IRFC dividend payout ratio fluctuates, peaking at 40% in 2016 and 2017, and stabilizing around 30-32% in the later years. This graph highlights the company’s growing profitability and its dividend distribution strategy over time.

IRFC Dividend Payout Ratio and Net Profits - Last 5 Years

Let's look at the IRFC dividend overview for the past five years, from 2020 to 2024:

FY 2020-21

As per the annual reports, in 2020-21, the company recorded a Net Profit of Rs. 4,416, of which 31% of the profits were given as Dividends.

FY 2021-22: 

As per the annual reports, in the year 2021-22, the company recorded a Net Profit of Rs. 6,090, of which 30% of the profits were given as Dividends.

FY 2022-23: 

As per the annual reports, in 2022-23, the company recorded a Net Profit of Rs. 6,167, of which 32% of the profits were given as Dividends.

FY 2023-24:

As per the annual reports, in the year 2023-24, the company recorded a Net Profit of Rs. 6,412, of which 31% of the profits were given as Dividends.

Is it Good to Invest in IRFC for Dividends?

Investing in IRFC for dividends can be a great strategy to earn passive income while simultaneously growing your wealth through capital appreciation. However, if your primary goal is to invest for dividends, it's crucial to ensure you're receiving a good dividend yield based on the price at which you purchased the shares. 

For instance, if you purchase a share at Rs. 10 and receive Rs. 1 as a dividend for the year, your dividend yield would be 10%. This is an attractive return. However, if you purchase the same stock after it increases to Rs. 20 and the dividend remains Rs. 1, your dividend yield at this new price would be just 5%. While the stock may still be a good investment for capital appreciation, your return from dividends would be significantly lower compared to the earlier dividend.

Future Outlook 

The prospects of IRFC over the long term seem to have a potential to grow owing to its essential function in mobilizing resources for the growth and modernization of Indian Railways, one of India's most crucial sectors of infrastructural development. As the government continues to finance the construction and development of railways, including other infrastructural investments, there is expected to be a continuous demand for the company’s services.

As the government continues to invest in large-scale rail projects and infrastructure development, IRFC is well-positioned to benefit from steady demand for its financial services. With its strong financial base and government backing, the company is expected to maintain stable operations and consistent dividend payouts. However, the investors must consider various factors like government policy changes and the growth prospects of the company before investing in their shares.q

 Conclusion

To sum up, the Indian Railway Finance Corporation has emerged as a strong dividend-paying company and has maintained a constant dividend payout ratio. Therefore, such investors who look forward to earning money steadily would find such investment options very lucrative. Moreover, the organization is in a strong financial position aided by government support and thus is expected to continue paying out dividends even in the future.

Frequently Asked Questions (FAQs)

Q1. When is the IRFC dividend record date?

For the year FY2023-24, the dividend record date was on August 2024. This was the day IRFC decided to pay the final dividend to its shareholders.

Q2. What is the IRFC dividend amount?

The dividend amount fluctuates every time, depending on various factors. However, in FY2023-24. IRFC provided a dividend of Rs. 0.70 per share to its shareholders.

Q3. I have not received my IRFC dividend yet. What should I do?

First, check whether you have purchased the shares before the ex-dividend date to be eligible for receiving the dividends. If in case you haven't received the IRFC dividend, you must check whether your bank details are fully updated, if not contact the Registrar and Transfer Agent of the particular company.  

Q4. When will the IRFC dividend be credited?

It is usually credited within 1 month or 30 days after the dividend record date of IRFC.

Q5. How much dividend will IRFC pay?

For FY2023-24, IRFC has paid to total of Rs. 1.50 per share. This constitutes Rs. 0.80 as an interim dividend and Rs. 0.70 as a Final Dividend. These prices may vary from time to time.

Q6. How many times does IRFC pay dividends in a year?
In the past IRFC has paid up to a maximum of 2 Dividends in a year: Interim Dividend and Final Dividend.