mumbai, June 23 -- In a bold display of corporate confidence, Indian companies have handsomely rewarded shareholders with a record Rs.4.9 lakh crore in dividends in FY25, even as profit growth slowed. The generous payout underscores a strategic shift among firms to prioritise returns for investors over aggressive reinvestment, signalling both optimism and caution in a volatile economic climate. A Mint analysis of 496 BSE 500 companies, based on Capitaline data that uses both audited and unaudited numbers (including proposed dividends), shows that dividend payouts rose 11% year-on-year in FY25, outpacing net profit growth of 9.5%. This marks the first such divergence in three years. In contrast, profit jumped 29% in FY24 while dividends grew a modest 7.5%. In FY23 too, firms were less generous, when profit grew 11% but dividend payouts rose only 8.8%. The trend reversal in FY25 points to a strategic recalibration-corporates are choosing to reward shareholders more aggressively even as earnings momentum slows. "Rising dividends outpacing profits reveal corporate confidence in rewarding shareholders despite modest earnings growth," said Akshat Garg, assistant vice-president, Choice Wealth. "While this signals stability to investors, it may also reflect caution-companies could be limiting reinvestment amid uncertain growth prospects." Meanwhile, beyond just dividends from profits, Hemant Nahata, executive vice president, strategy at Yes Securities, offers a comprehensive view on shareholder payback, factoring in operating cash flows. "Shareholder returns should be viewed holistically, combining dividends and buybacks," he noted. "When we evaluate shareholder payback, we focus on how companies deploy their operating cash flows-not just profits. In FY25, Indian corporates returned around 29% of their operating cash flows to shareholders through dividends and buybacks, a marginal rise from 28.8% in FY24 and slightly below 31-32% in FY23, reflecting a consistent payout trend," he added. While these generous giveaways reached record highs in the previous year, outpacing even the bottomline growth of the companies, it translated into a payout ratio of 35.2% (as a share of profit) in FY25. This ratio remains significantly below the decade's average of 42%, implying companies are distributing more but are also retaining a larger share of earnings compared to historical trends. "This shows a shift in strategy. Companies are retaining slightly more profits, possibly due to fewer growth opportunities or macro uncertainty," said Pranay Aggarwal, chief executive officer of Stoxkart....