TCS Dividend: Should you buy TCS stock ahead of dividend record date on January 17? | Stock Market News

Tata Consultancy Services (TCS), India’s largest IT services firm, has once again rewarded its shareholders with a massive dividend, reinforcing its position among the highest dividend-paying IT stocks in the country.

TCS board of directors, in its meeting on January 9, approved a third interim dividend of ₹10 per share and a special dividend of ₹66 per equity share, along with its earnings for the quarter ended December 2024.

TCS dividend record date is January 17 and the dividend payout will benefit equity shareholders whose names appear in the company’s records as of the record date. TCS dividend payout date is February 3, 2025.

This latest announcement brings TCS’ total equity dividend for FY25 to ₹96 per share, including the earlier interim payouts of ₹10 each in July and October 2024.

TCS has been a consistent performer when it comes to rewarding its shareholders. Since October 2004, the company has declared a remarkable 88 dividends, underscoring its strong financial performance. Over the past 12 months, TCS has distributed dividends amounting to ₹75 per share. At its current share price of ₹4,248 apiece, TCS dividend yield stands at 1.77%.

TCS Dividend to Tata Sons

Tata Sons, the promoter of TCS, is poised to receive a substantial dividend payout from the IT giant for the financial year 2024-2025. During the first nine months of the current fiscal year, Tata Sons is set to earn dividends exceeding ₹24,900 crore from TCS.

TCS Q3 Results

TCS reported a net profit of ₹12,380 crore in the third quarter of FY25, registering a growth of 4% from ₹11,909 crore in the previous quarter. The company’s revenue in Q3FY25 eased 0.4% to ₹63,973 crore from ₹64,219 crore, QoQ. Revenue in USD terms was at $7,539 million. EBIT increased 1.2% QoQ to ₹15,657 crore, while EBIT margins grew by 40 bps sequentially to 24.5%.

Should you buy TCS shares ahead of dividend record date?

TCS’s latest dividend announcement reflects its strong Q3 performance and sustained leadership in the IT industry. The IT major reported a decent uptick in its financials during the December quarter.

Sagar Shetty, Research Analyst, StoxBox, noted that a significant tailwind for TCS during the quarter would be the healthy Total Contract Value (TCV) of $10.2 billion (up 26% YoY), given the absence of any mega deals. According to him, this robust TCV suggests strong revenue visibility as the scenario of deal leakages going ahead is unlikely.

“Additionally, the revival in discretionary spending across verticals fuels optimism about the company’s future outlook. This positive outlook is further buoyed by management’s optimistic commentary on the demand environment and recovery in key verticals. Moreover, with the attractive interim dividend declaration of ₹76, the shares stand to be at a sweet spot. We thus recommend investors buy TCS shares ahead of the dividend record date with a medium to long-term perspective,” said Shetty.

Is TCS stock a safe-haven bet amid market volatility?

Indian stock market has been highly volatile recently, weighed down by a slew of global and domestic factors. Sustained selling by foreign institutional investors (FII), strength in US dollar and rising Treasury yields amid lower expectations of US Federal Reserve interest rate cuts, have resulted in a sharp correction in Sensex and Nifty 50 from their record high levels.

TCS share price has risen by over 2% over the past three months, outperforming the benchmark Nifty 50, which has declined by 6.5% during the same period. Over the last six months, TCS shares have remained relatively stable, while the Nifty 50 has recorded a decline of more than 5%. On a one-year basis, TCS stock price has delivered a return of 9%, surpassing the Nifty 50’s gain of 6%.

Amidst the volatility, Shetty believes TCS stands poised as a strong defensive stock in the IT space.

“With a comprehensive product solution spectrum, TCS is well positioned to garner the growing demand for digital transformation across industries with its strong position as the leader in the IT sector. The outlook is further enhanced with the rate cut in FY24, which bodes well for the company and a healthy TCV of 10.2 billion (up 26% YoY), which acts as a significant tailwind going ahead. Management’s positive view on the discretionary spending outlook and advanced hopes of recovery in key verticals further boost its outlook as a compelling investment opportunity,” Shetty said.

At 2:00 PM, TCS shares were trading 1.05% higher at ₹4,204.00 apiece on the BSE, commanding a market capitalisation of more than ₹15.21 lakh crore.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.