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Give the dividend its due

Dividends have made a big difference to long-term returns from equities

It’s dividend season at India Inc and if you own a large portfolio of shares, you are probably getting scores of intimations on dividend credits to your bank account. And if you are like most investors, you are probably ignoring them.

Well, that’s where we are making a mistake. Though Indian investors are often fixated with capital appreciation, dividends do make a significant difference to our long-term returns from equities.

Re-investing dividends

But isn’t the dividend yield on Indian shares quite low? The Nifty dividend yield is only 1.4 per cent, after all. Yes, but stocks are a long-term investment and over a 5-10-year period, dividends (if properly reinvested) can bump up the portfolio returns quite a bit.

To gauge how much of a difference dividends can make, you only need to compare the Total Return indices disseminated by the stock exchanges to the widely used price indices. The NSE, for instance, disseminates the Total Return index on its bellwether Nifty index. This index captures the effective returns on the base index if the dividends paid by the constituent companies were re-invested in the index.

For the last one year, if the plain vanilla Nifty (capturing only the price) is down by 3.41 per cent, the Nifty Total Return index is down 2.35 per cent. If that 1 percentage point does not seem much, it adds up to quite a lot over a 5-10-year time-frame. (All returns computed as of November 4, 2015).

Over a five-year period, the Nifty has made absolute gains of 30.8 per cent. But the Nifty Total Return index is 8 percentage points ahead, at 38.8 per cent. Over a 10-year period, the gap gets wider.

An investment of ₹1 lakh in the Nifty in November 2005 would be worth ₹3.28 lakh now, if you consider only price appreciation; but it would be worth ₹3.76 lakh — 15 per cent more if you had systematically tracked and re-invested the dividends.

But this is the number for the index stocks. If you own a portfolio that has a number of FMCG or tech companies, cash-rich public sector firms, public sector banks or other liberal dividend payers of India Inc, chances are that dividends amount to an even higher segment of returns in your case.

Separate account

This cumulative impact of dividends on portfolio returns argues for keeping track of all your dividends in a systematic manner and making sure that you re-invest them quickly.

Owning a separate bank account into which you direct all your ECS payments would be a good idea, to segregate and invest your dividend income promptly.

If re-investing your dividends back into the same stocks (which is what Total Return calculations assume) is difficult, you could plough them into a good diversified equity fund or, if you are risk-averse, a bank fixed deposit, so that the compounding effect can get to work.

Vanishing outperformance

But the Total Return concept is not just useful to remind you to be disciplined about dividends. It is useful when you evaluate mutual fund performance too.

Today, a majority of index funds and exchange traded funds (ETFs) in India end up ‘outperforming’ their chosen indices, because they are benchmarked against the plain vanilla price indices.

Therefore, while the index fund does receive dividends from its portfolio of companies and re-invests them, its returns look superior when they are compared to just a price index. If Total Return indices are used, the relative performance no longer looks as good.

Take the Nifty-based index funds and ETFs for the last one year, for example. If one uses the Nifty index (down by 3.41 per cent) to compare returns, 12 of the 18 funds have outpaced it. But if you consider the Total Return index (down by 2.35 per cent), 15 of the 18 funds fail to match it.

Dividend themes

While the difference that dividends make shows up quite clearly in the case of index funds, the dividends received should make a significant difference to the portfolio returns of diversified equity funds too. The dividend contributions would be particularly high for funds which are overweight on themes, such as oil and energy, high dividend yield stocks, PSUs, PSU banks, consumer stocks and Shariah strategies.

These are pockets of companies in the Indian market that pay out high dividends.

If you own funds heavily tilted towards them, you should use the Total Return indices to evaluate their real performance.

Therefore, the next time you take stock of the performance of your personal portfolio against benchmarks, do it against the Total Return indices. That will ensure that you don’t ignore the difference that dividends can make to your long-term wealth.

Bihar Election 2015 in pictures

The Ten Commandments Of 'Ek Paheli Leela'

But hang on, this treasure chest isn't as much of an open-and-shut case. Ek Paheli Leela actually stays true to the tropes of its genre, but makes up its own rules as it goes along. If you're planning to watch this movie for whatever reason (no judgement, guys; this is a safe space), these are rules that you need to know.

Without further ado and due apologies to Moses, here are this movie's own ten commandments:

1. Thou shalt not miss a single opportunity to lovingly focus on Sunny Leone's assets

Sunny Leone quit being an adult star nearly three years ago, but Bollywood has already made her the world's no. 1 'clothed' porn star. From her debut in Jism 2(2012) to here, the way shots are taken and scenes are edited point to one singular agenda: to show off Leone's assets in the only manner that won't rile our otherwise oversensitive censors up. From the opening number 'Desi Look' onwards, every song (and costume) is an excuse to zoom into her cleavage or painstakingly highlight her bare thighs.

2. Thou shalt rehash the tired rebirth-and-retribution genre in order to justify your big-budget 'clothed' porn film

There is a plot, of course. Meera (Leone) is a supermodel of Indian origin from Milan, Italy (with a North American accent, of course). She is taken to Rajasthan for a shoot. Meanwhile, in Mumbai, a young music producer named Karan (Jay Bhanushali) has nightmares about being whipped in what eventually turns out to be Rajasthan, circa 300 years ago. He also dreams of a woman named Leela, who looks an awful lot like Meera. How does he know who Meera is? Because his cousin is the photographer on said shoot.

You've already figured the rest out.

3. Thou shalt save money by casting low-budget Jimmy Sheirgill instead of actual Jimmy Sheirgill

This movie features a Rajasthani prince named Ranveer Singh, but much to the disappointment of meta-lovers, the character has been played by Mohit 'James' Ahlawat. He is introduced as the member of the royal family of Jaisalmer, whose premises the shoot takes place in. It is a role that Sheirgill, who has played similar turns in the Sahib, Biwi Aur Gangster movies, could've played in his sleep. Ahlawat, in contrast, is the Xerox copy that may or may not get rejected at the passport renewal office.

4. Thou shalt introduce gay character only for purposes of homophobic caricature

UK-born VJ Andy, seen on Channel [V] and the seventh season of Bigg Boss, plays an openly gay man who... does... something related to dance shows and organises shoots for... stuff (okay, maybe I missed something here). Anyway, as far as the movie is concerned, it is not what he does for a living that's important. Andy's job is to be the gay guy, pure and simple. This means lots of animated hand-waving, overreacting in the presence of attractive men, and opportunities for low-brow jokes made by comedian Ehsaan Qureshi, who plays Prince Ranveer's right-hand man.

"Sunny Leone quit being an adult star nearly three years ago, but Bollywood has already made her the world's no. 1 'clothed' porn star."

5. Thou shalt always depict alcohol as a substance that makes people unrealistically stupid

Sometimes it really seems as though Bollywood thinks alcohol and LSD are basically the same thing. In an early scene, Meera, out and about in London after four measly beers, asks why she didn't just start with the fourth one instead of having three beers before that (I don't know; this was supposed to be a funny line). Later, she gets so drunk that, despite having a crippling fear of flying, she passes out on a chartered flight from the UK to India -- all the while believing that it is an airplane-themed restaurant.

There are no words.

6. Thou shalt continue the grand old Bollywood tradition of never knowing how music works, despite every film having music

Karan is a super successful music producer whose music is used in fancy shows all around the world. And yet, when he is shown recording his band, the instruments don't seem to be plugged into anything as they jam in the same room as the mixer. Not, you know, the other sound-proof room which is perhaps misleadingly referred to as the recording booth.

7. Thou shalt change Sunny Leone's accent and diction at will

A funny thing happens in this movie. As Meera, Leone speaks in her native Canadian accent. In the flashback sequences set 300 years ago that depict her as Leela, a feisty Rajasthani girl, her voice seems obviously dubbed by someone else, bringing some much-needed credibility to her performance in this portion of the film. However, as she stays back in Rajasthan for a month after the shoot wraps up, her accent suddenly becomes closer to that of the average urban Indian. How does that happen?

8. Thou shalt make Rajasthani structure look like ancient Incan/Egyptian/Aztec temple, because who knows the difference, amiright?

A lot of action takes place in a temple, which is shown to be sculptor Bhairav Singh's (played by Rahul Dev) workspace in the flashback. Here, he plans to install his greatest creation--a statue dedicated to Leela, whom he lusts for. High ceilings, giant statues, massive columns and a distinct lack of detailed, ornate carvings dominate this massive structure.

Yep, sounds Rajasthani all right.

9. Thou shalt subvert the genre by showing that rebirth doesn't necessarily mean they look the same

While Bhairav lusts for Leela, her heart belongs firmly to one of his apprentices, the handsome Shravan (Rajneesh Duggal). However, in the present, Bhanushali is shown to be Shravan's reincarnated avatar, which makes one wonder why it was only Leone who was re-born with the exact same face and body.

To the movie's credit, this anomaly is explained in the climatic scene, only in the laziest possible manner.

10. Thou shalt exploit Leone's looks and past, but not nearly enough for her fans

As I walked out of the theatre, a couple of teenagers next to me yawned loudly.

"Kya bore picture thha yaar," said one.

"Haan, kya pakau story aur kuchh achhey se scenes bhi nahi dikhaaya," replied his friend, lamenting the lack of steaminess in the film's sex scenes.

"Abey theek hai na, woh toh ghar pe bhi dekh sakta hai," replied the first one.

Again, no words.

మోడీని గద్దె దించుతాం:లాలూ

ప్రధా ని నరేంద్ర మోడీని గద్దె దించుతామని ఆర్జేడీ అధినేత లాలూప్రసాద్‌ యాదవ్‌ పేర్కొ న్నారు. ఆదివారం ఆయన పాట్నాలో మీడియాతో మాట్లా డుతూ మోడీపై విరుచుకు పడ్డారు. తమది జంగల్‌ రాజ్యమని మోడీ ప్రచారం చేయడాన్ని తప్పుపట్టారు. బీహార్‌ ఫలితాలతో బిజెపి బెంగాల్‌ చేరుకోవడం కష్టమేనని లాలూ జోస్యం చెప్పారు. బిజెపి ఆర్‌ఎస్‌ఎస్‌ అజెండా అమలు చేస్తే సహించేది లేదని స్పష్టం చేశారు. బీహార్‌ యువత అండగా నిలువడం వల్లనే తామీ ఘన విజయాన్ని సాధించగలిగామని లాలూ పేర్కొన్నారు. బీహార్‌ ప్రజలు ఎన్డీఎకు సరైనా గుణపాఠం చెప్పారని పేర్కొన్నారు. ప్రజలకు కృతజ్ఞతలు తెలిపారు.బీహార్‌ అభివృద్ధికి శక్తి వంచనలేకుండా కృషి చేస్తామన్నారు.