As the Indian Fast-Moving Consumer Goods (FMCG) sector heats up, ITC and Hindustan Unilever stand out as the two leading players. With the Q4 FY25 earnings report on the horizon, investors are keenly anticipating not only the financial results but also the dividend announcements from these industry titans. Both companies boast impressive dividend yields exceeding 1%, placing them among the top 10 most valuable firms in India, with ITC at approximately Rs 5.28 lakh crore and HUL slightly ahead at Rs 5.56 lakh crore.

Dividend Insights for FY25

In the current fiscal year, both ITC and HUL have already delighted their shareholders with generous interim dividends. ITC has announced a dividend of Rs 6.5 per share, which represents a staggering 650% payout based on a face value of Rs 1. Meanwhile, HUL has declared an impressive Rs 29 per share, translating to a remarkable 2900% payout on the same face value.

These interim dividends are just the beginning, as both companies are expected to finalize their dividend declarations soon. Notably, HUL has scheduled a board meeting on April 24 to discuss the final dividend recommendations for FY25.

Analyzing Dividend Yields

While HUL’s payout is indeed higher, the true return on investment becomes clearer when examining the dividend yield. Currently, ITC’s share price hovers around Rs 422, offering a dividend yield of approximately 1.54%. In contrast, HUL, with a share price of about Rs 2,362.10, presents a lower yield of approximately 1.23%.

Q3 FY25 Financial Performance

In the third quarter of FY25, ITC showcased a 1% increase in standalone net profits, reaching Rs 5,638 crore, which exceeded analyst expectations. Although its consolidated net profit saw a 7% decline to Rs 5,013 crore, overall revenues surged to Rs 20,350 crore, up from Rs 18,880 crore a year earlier. During this period, ITC also confirmed its interim dividend of Rs 6.5 per share.

Conversely, HUL reported a robust 19% year-on-year increase in net profit, totaling Rs 3,001 crore, with quarterly revenues of Rs 15,818 crore, marking a 1.6% growth from the previous year. The company maintained an EBITDA margin of about 23.5%.

Stock Market Dynamics

Recent stock performances reveal contrasting trends for ITC and HUL. ITC shares closed at Rs 422, reflecting a 1.3% daily increase. Over the past week, the stock has risen by 4%, with a monthly growth of 3.5%. However, a six-month review shows ITC has faced a significant 15% correction, with a 13% decrease year-to-date and an annual drop of about 1%.

On the other hand, HUL shares have also performed well, enjoying a 5% rise in the last five days and a 7% increase over the past month. Despite a 15% decline in the last six months, HUL has registered an 8% annual gain, and its year-to-date performance shows an uptick of nearly 2%.

Understanding the Companies

Founded in 1910 as the Imperial Tobacco Company, ITC has evolved into a diversified conglomerate, spanning FMCG, hospitality, and more. Its popular brands, such as Aashirvaad, Bingo, and Sunfeast, are household favorites in India.

HUL, established in 1933 and a subsidiary of Unilever, has solidified its presence in the Indian market with over 50 brands across personal care, home care, and food and beverages. Iconic products such as Dove, Surf Excel, and Lipton have become staples in many households.

As Q4 FY25 earnings season approaches, all eyes will be on how these industry leaders perform financially and what announcements they make regarding dividends and future growth strategies. Investors are advised to stay tuned for insights that could influence market dynamics in the coming weeks.