These three Adani shares will become ex-dividend on July 14 – should you buy them?

  • Three Adani stocks declared dividends ranging from 25% to 250% for FY22.
  • Investors in these three Adani Group companies will be eligible for the dividend if they hold the stock on the ex-dividend date.
  • If you don’t already own these shares, you can still buy them and collect dividends – but should you?

Three Adani shares will be ex-dividend on July 14 – and these shares had declared dividends of between 25 and 250% of their face value, in FY22. Adani Enterprises, Adani Ports and Adani Total Gas – together control a market capitalization of more than ₹7 lakh crore.

There is an interesting inverse relationship between the dividend yield and the stock market rally. Adani Total Gas has the highest market cap thanks to a massive rally over the past year, but declared the lowest dividend at 25 paise per share. Adani Ports, which saw a negligible increase in its market cap, declared the highest dividend at ₹5 per share.

Adani Enterprises, the oldest company in the Adani Group, declared a dividend of ₹1 per share.

Company Market capitalization Change over 1 year YTD Dividend
Adani Enterprises ₹2,70,550 crore 66.7% 37.9% ₹1
Adani Ports ₹1,54,034 crore 2.6% 0% ₹5
Adani Total Gas ₹2,98,779 crore 207.7% 60.5% ₹0.25

Note: Market cap and performance as of July 11, 2022 | Divide by share

The three shares become ex-dividend on July 14 and the record date is July 15.

Basically, if you want to earn dividends, you’ll have to buy those stocks today or tomorrow. Once a stock becomes ex-dividend, you will no longer be entitled to receive the dividend that was announced.

Here’s how much dividend you would have earned on the three Adani shares over the past three years if you owned 100 shares of each company:

Company EX22 FY21 FY20
Adani Enterprises ₹100 ₹100 ₹100
Adani Ports ₹500 ₹500 ₹320
Adani Total Gas ₹25 ₹25 ₹25

Source: Company Reports

Dividends against returns

The dividends declared would pale in comparison to the value earned by these Adani stock investors. All Adani Group shares have seen a massive rally over the past year.

Adani Total Gas alone has tripled its returns over the past year. The only stock that generated negligible returns during this period is Adani Ports & SEZ.

So, should you buy these Adani shares?

According to HDFC Securities’ Deepak Jasani, investors should not consider buying stocks just for the dividends.

“Adani shares are very volatile counters and would not advise conservative investors to invest in these stocks just for the dividend. Only aggressive traders may consider buying these stocks on dips based on market trends” , Prashanth Tapse, vice president – research, Mehta Equities, told Business Insider India.

Kush Ghodasara, a market expert, told Business Insider India that while Adani Total Gas is near its lifetime peak and as such at a high valuation, the other two stocks – Adani Enterprises and Adani Ports are worth worth considering.

Ultimately, risk appetite alone helps determine equity investments. Although high-growth companies are riskier bets, they generally tend to reinvest their profits back into the business instead of paying out dividends.

On the other hand, most companies unable to show high growth, especially public sector companies, pay higher dividends for two reasons – dividends are a way for promoters to earn money and reward their long-term investors.

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