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Vedanta dividend: ₹1 lakh turned into ₹8.4 lakh in five years through dividend reinvestment

Upstox
By Upstox News Desk

5 min read | Updated on September 02, 2024, 11:23 IST

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SUMMARY

This article analyses Vedanta Ltd, a prominent Indian mining company known for its generous dividends and substantial capital appreciation. By examining a five-year investment scenario starting in 2020, it highlights how shareholders have benefited from dividends and reinvesting them, achieving significant returns.

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VEDL
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Vedanta Ltd is known for its generous dividend payout amongst investors

The Indian stock market is filled with examples of amazing stocks which have created enough wealth for its loyal shareholders to live a long happy life. In this article, we are going to discuss the case study of Vedanta Ltd- an Indian mining giant company owned by Anil Agarwal.

Vedanta Ltd announced on August 28 that its board will meet on September 2, 2024, to consider and approve the third interim dividend for the financial year 2024-25. The company stated that the record date to determine the entitlement of equity shareholders for the dividend is set for September 10, 2024. The announcement was made in a regulatory filing to the BSE. Vedanta has been ranking on the top with one of the highest dividend yeilding stock. Having a market capitalisation of approximately ₹1,80,113 crore, this large-cap corporation is famous for its generous dividends. Its regular dividend income has proved to be a boon for investors in past few years by creating huge wealth.

Wealth creation through dividend in past five years

Let's find out how much income would have been generated if ₹1,00,000 had been invested in Vedanta five years ago when the company announced its dividend on March 5, 2020, with the share trading around ₹117. We’ll also look at the returns the stock has provided since then.

DateDividend (₹)CMP (₹)QtyDividend Income (₹)
05-03-202041178553419
28-10-20201095.48558547
08-09-202119298.9585516239
17-12-202114332.5585511966
09-03-202213371.2585511111
06-05-202232360.585527350
26-07-202220241.485517094
29-11-202218301.8585515385
03-02-202313314.385511111
06-04-202321273.285517949
30-05-202319285.685516239
27-12-202311252.48559402
24-05-202411460.88559402
02-08-20244434.28553419
29-08-2024Total Dividend Income1,78,632

Source: BSE

As per the above table, if you had invested ₹1,00,000 in stocks of Vedanta Ltd 5 years back when it was trading at ₹117, it gives 855 shares. The total income generated through the dividend is ₹1,78,632 indicating a 5-year dividend yield of 44.84%.

If we calculate the returns in absolute terms, the dividend income has generated 178.63% returns on the investment. In terms of capital appreciation, the stock has given returns of 398.33% in the same period.

Considering all the actual returns earned by investors who invested ₹1,00,000 in Vedanta five years ago to gain dividends along with price appreciation - it has generated holding period returns of 476.97%.

What if you had reinvested the received dividend?

Let's explore the possibilities of dividend income by imagining an reinvestment scenario. Suppose ₹1,00,000 was invested in Vedanta five years ago when the company announced its dividend on March 5, 2020, with shares trading around ₹117 each, and the dividends were continuously reinvested. How much wealth would this investment have generated by now?

The following table completes the above scenario till today - August 29, 2024

DateDividend (₹)CMP (₹)QtyDividend Income (₹)Add Qty Bought from Dividend IncomeTotal Qty
05-03-20204117855341929884
28-10-20201095.4884883993977
08-09-202119298.9597718555621039
17-12-202114332.55103914541441082
09-03-202213371.25108214071381120
06-05-202232360.5112035849991220
26-07-202220241.41220243941011321
29-11-202218301.85132123774791400
03-02-202313314.3140018194581457
06-04-202321273.21457306061121569
30-05-202319285.61569298191041674
27-12-202311252.4167418412731747
24-05-202411460.8174719215421788
02-08-20244434.217887154161805
28-08-2024-466.051805--1805

Source: BSE

As per the above table, if you held the shares until today, you would have a total of 1,805 shares. As per Friday’s closing price of ₹467.65 per share, your ₹1,00,000 investment would have grown to ₹8,44,016.56, representing a return of 744.20%

Investing in Vedanta Ltd has provided substantial wealth creation through dividends and capital gains, showcasing the power of long-term investing and dividend reinvestment in maximising shareholder returns.

Disclaimer: This article is for informational purposes only and must not be considered investment advice from Upstox. Past returns are not indicative of future performance. Please consult with a financial advisor before trading and investing.
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About The Author

Upstox
Upstox News Desk is a team of journalists who passionately cover stock markets, economy, commodities, latest business trends, and personal finance.

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