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Vedanta dividend: ₹1 lakh turned into ₹8.4 lakh in five years through dividend reinvestment
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5 min read | Updated on September 02, 2024, 11:23 IST
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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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.
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.
| Date | Dividend (₹) | CMP (₹) | Qty | Dividend Income (₹) |
|---|---|---|---|---|
| 05-03-2020 | 4 | 117 | 855 | 3419 |
| 28-10-2020 | 10 | 95.4 | 855 | 8547 |
| 08-09-2021 | 19 | 298.95 | 855 | 16239 |
| 17-12-2021 | 14 | 332.55 | 855 | 11966 |
| 09-03-2022 | 13 | 371.25 | 855 | 11111 |
| 06-05-2022 | 32 | 360.5 | 855 | 27350 |
| 26-07-2022 | 20 | 241.4 | 855 | 17094 |
| 29-11-2022 | 18 | 301.85 | 855 | 15385 |
| 03-02-2023 | 13 | 314.3 | 855 | 11111 |
| 06-04-2023 | 21 | 273.2 | 855 | 17949 |
| 30-05-2023 | 19 | 285.6 | 855 | 16239 |
| 27-12-2023 | 11 | 252.4 | 855 | 9402 |
| 24-05-2024 | 11 | 460.8 | 855 | 9402 |
| 02-08-2024 | 4 | 434.2 | 855 | 3419 |
| 29-08-2024 | Total Dividend Income | 1,78,632 |
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
| Date | Dividend (₹) | CMP (₹) | Qty | Dividend Income (₹) | Add Qty Bought from Dividend Income | Total Qty |
|---|---|---|---|---|---|---|
| 05-03-2020 | 4 | 117 | 855 | 3419 | 29 | 884 |
| 28-10-2020 | 10 | 95.4 | 884 | 8839 | 93 | 977 |
| 08-09-2021 | 19 | 298.95 | 977 | 18555 | 62 | 1039 |
| 17-12-2021 | 14 | 332.55 | 1039 | 14541 | 44 | 1082 |
| 09-03-2022 | 13 | 371.25 | 1082 | 14071 | 38 | 1120 |
| 06-05-2022 | 32 | 360.5 | 1120 | 35849 | 99 | 1220 |
| 26-07-2022 | 20 | 241.4 | 1220 | 24394 | 101 | 1321 |
| 29-11-2022 | 18 | 301.85 | 1321 | 23774 | 79 | 1400 |
| 03-02-2023 | 13 | 314.3 | 1400 | 18194 | 58 | 1457 |
| 06-04-2023 | 21 | 273.2 | 1457 | 30606 | 112 | 1569 |
| 30-05-2023 | 19 | 285.6 | 1569 | 29819 | 104 | 1674 |
| 27-12-2023 | 11 | 252.4 | 1674 | 18412 | 73 | 1747 |
| 24-05-2024 | 11 | 460.8 | 1747 | 19215 | 42 | 1788 |
| 02-08-2024 | 4 | 434.2 | 1788 | 7154 | 16 | 1805 |
| 28-08-2024 | - | 466.05 | 1805 | - | - | 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.
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