A STUDY ON DIVIDEND POLICY AND SHAREHOLDER WEALTH: TATA CONSULTANCY SERVICES (TCS)

Abstract

Dividend policy is one of the most debated topics in corporate finance, influencing how firms distribute earnings and how investors perceive shareholder value creation. Tata Consultancy Services (TCS), India’s largest IT services company and a consistently profitable blue-chip entity, offers a compelling case for studying the relationship between dividend policy and shareholder wealth. This paper examines TCS’s dividend behaviour over a ten-year period from 2014–15 to 2023–24, analysing trends in Dividend Per Share (DPS), Earnings Per Share (EPS), Dividend Payout Ratio, and their relationship with shareholder wealth indicators including stock price, market capitalisation, dividend yield, and Total Shareholder Return (TSR). Secondary data sourced from TCS Annual Reports, BSE/NSE disclosures, and SEBI filings are analysed using correlation analysis, multiple regression modelling, and descriptive statistics. Findings reveal a statistically significant positive correlation between TCS’s dividend per share and its stock price (r = 0.964, p < 0.01), confirming that progressive dividend announcements act as positive signals to the market. The study concludes that TCS’s consistent and growing dividend policy has been a major contributor to long-term shareholder wealth creation, and offers strategic recommendations for dividend management in large-cap Indian IT firms.