43 struggling listed firms declare dividends, but sponsors and directors forgo payouts

According to DSE data, 170 listed companies have announced dividends for the financial year. Of them, 56 recommended cash dividends of more than 10%, while 28 declared less than 10%.

As many as 43 struggling listed companies have recommended dividends exclusively for general shareholders for FY26, excluding their sponsors and directors from payouts, highlighting financial pressure on the firms and their efforts to retain their stock market listing categories.

According to Dhaka Stock Exchange (DSE) data, 170 listed companies have announced dividends for the financial year. Of them, 56 recommended cash dividends of more than 10%, while 28 declared less than 10%. Seven announced both cash and stock dividends, and one recommended only a stock dividend.

Meanwhile, 34 companies declared no dividend. Six – Apex Tannery, Bangladesh Building System (BBS), Deshbandhu Polymer, Golden Son, Investment Corporation of Bangladesh (ICB) and Information Services Network (ISN) – have been downgraded to the Z category after failing to declare dividends for two consecutive years.

The 43 companies offering dividends exclusively to general shareholders span sectors including textiles, pharmaceuticals, power, food and engineering. Their payouts range from 0.10% to 40.5%.

Far Chemical, Kattali Textile, ML Dyeing, Master Feed, Monno Fabrics, Silva Pharma and VFS Thread each recommended a 0.10% cash dividend, equivalent to just one paisa per share against a Tk10 face value.

Fine Foods declared the highest dividend among the 43, recommending 40.5%. Doreen Power and Paramount Textile each announced 15%, while Tamijuddin Textile proposed 13%. Aman Feed and Craftsman Footwear recommended 10.5% and 10%, respectively.

Among all listed companies, Meghna Petroleum topped the dividend list with a 210% cash payout, or Tk21 per share, followed by Padma Oil with 170%, or Tk17. Square Pharmaceuticals recommended 130%, Jamuna Oil 120% and Eastern Lubricants 115%.

A brokerage firm’s managing director said companies were not required to distribute dividends to all shareholders, allowing financially distressed firms to declare nominal payouts exclusively for general investors.

Such declarations help companies retain their listing categories, benefiting general shareholders, although the nominal amounts raise questions about sponsors’ and directors’ intentions, he said.

Under DSE listing regulations, companies paying dividends of at least 10% qualify for the A category, while those paying less than 10% fall under the B category. Firms failing to declare dividends for two consecutive years are moved to the Z category.

The executive said sponsors and directors were also foregoing dividends, while some companies might be retaining cash to support their businesses rather than withdrawing it.

However, an asset management company analyst said token dividends did not necessarily indicate improved financial health, raising questions about whether firms could generate sufficient profits and cash flow to sustain operations and deliver meaningful returns.

While even small payouts offer general shareholders some returns, market experts advise investors to assess companies’ earnings, cash flow, debt burden and business prospects rather than rely solely on dividend declarations.

The gap between substantial payouts by profitable firms and token dividends of one paisa per share reflects the uneven financial health of the listed market, market insiders said.

Source: The Business Standard