It might not be as rewarding to be an owner of a Hero Honda motorcycle than it is to be an owner of Hero Honda stocks. Known for declaring one of the highest rate of dividends in India, the home grown two-wheeler maker has declared an interim dividend of 3500% on a face value of Rs. 2. This amounts to a dividend of Rs. 70 per share. So how benefits the most out of this? Public shareholders, FIIs or financial institutions? Well, none of them. It is the Munjals themselves.

The Munjals after the Honda buyout from the company hold 10.42 crore shares in the company, which is equivalent to 52.21 of total shareholding. With the rate of dividend declared the Munjal family with take home Rs. 730 crore as dividend income. Dividend income is non taxable so that is an amazing way for promoters to earn cool profits without doing anything. So if you bought 10 shares at Rs. 1600 per share (rounded of market price of Hero Honda in BSE before the dividend was announced) you would have earned Rs. 700 as dividend income. You could sell the share at current market price of Rs. 1,786/- you would have made a total return of 15%. Now you know why Hero Honda is a hot favourite for investors.