Dividend Investing: The Ideal State-Owned Enterprise

Meenakshi Joshi, a certified financial planner in India, was deciding which stocks to recommend to her risk-averse, income-seeking retired clients. For these types of portfolios she often sought stocks that paid regular dividends. Then, in April 2023, the state government of Gujarat officially mandated the payment of dividends—the first such mandate in India—and seven state-owned enterprises (SOEs) became ideal candidates for dividend investing. The markets responded positively to the mandate, and the seven SOEs announced their highest-ever dividend per share. Given the dividend histories, company characteristics, and financial status of these SOEs, which one should Joshi recommend to her risk-averse clients? The case places students in the shoes of the financial planner, allowing them to simulate her thought process when selecting stocks for her clients. Students will be expected to critically understand corporate dividend decisions and behavioural factors in the differential context of investing.