In a market that often chases growth and quick profits, dividend income remains in the background. Nevertheless, dividends play an important role in long-term investing. They provide regular cash flow to investors. More importantly, when these payments are reinvested, they silently compound. Over time, this combination of income and reinvestment can meaningfully increase overall returns.
dividend paying companies It also reflects a certain financial discipline. These are businesses that generate surplus cash and choose to share it with shareholders. Instead of plowing all the profits back into expansion, they continually return a portion. This creates a stable source of income. It also provides some relief during a period when price returns may be uncertain.
There is one investor who appears to allocate capital through this lens Radhakishan Damani. He is best known as the founder of DMart (Avenue Supermarts) and as a long-term investor in Indian equities. Over the years, his approach has been rooted in patience, discipline and a strong focus on business fundamentals. While his main success has come from building a high-growth retail business, DMart, his listed portfolio also shows how capital is deployed in a variety of companies.
This article is based on that idea. It focuses on a group of stocks in their portfolio that stand out for their dividend track record. Selection is not based on yield alone. It looks at the continuity of payments and the ability of these businesses to generate surplus cash over time. Together, these stocks help explain how dividend-paying companies fit into a broader capital allocation strategy.
#1 VST Industry: High-growth core and efficiency gains
VST Industries Engaged inter alia in the manufacturing and trading of cigarettes, Tobacco and tobacco products.
As of March 2026, Radhakishan Damani holds 29.1% stake in VST Industries. This has been their shareholding pattern in VST Industries for the last eight quarters.
Radhakishan Damani Shareholding Pattern in VST Industries (June 2024 – March 2026)
| June-24 | September-24 | December-24 | March-25 | June 25 | September 25 | December-25 | March-26 |
| 34.7% | 29.1% | 29.1% | 29.1% | 29.1% | 29.1% | 29.1% | 29.1% |
Q3 FY26 performance: Overcoming inflation with 120% profit growth
VST Industries recorded a steady performance in the March quarter, supported by stable demand in the cigarette segment and improving performance during the second half of the year. Revenue for Q3 FY26 stood at Rs 689 crore, up 51.4% year-on-year (YoY), reflecting strong growth in sales realizations and improved operational momentum. Net profit for the quarter stood at Rs 117 crore, up 120.8% year-on-year, translating into strong year-on-year growth.
The performance comes despite challenging operating environments. The company faced cost pressures due to regulatory changes in taxation as well as inflation in key raw materials, particularly tobacco leaf. However, focused cost management and strategic purchasing helped relieve some of these pressures. The mid-premium segment in the cigarette portfolio also witnessed gradual growth, aided by new product launches and brand interventions aimed at improving market position.
Efficiency and Dividend: Impact of Integrated Azamabad-Toopran Facility
On the operational front, VST has completed the integration of its Azamabad facility with the Topran manufacturing unit. The integrated plant is now fully operational and is expected to improve efficiency, reduce costs and support long-term growth. The company is also investing in digital initiatives across its distribution network and supply chain, aimed at strengthening access to markets and improving execution.
Dividend remains a major attraction for the company.
For FY26, the board has recommended a final dividend of Rs 12 per share, with July 10, 2026 set as the record date. At the current price, the dividend yield is a very attractive 4.7%.
The company has declared 26 dividends since 2001, indicating a consistent track record of returning cash to shareholders.
The payout reflects a steady pattern of distribution in recent years. This is supported by strong cash generation and relatively low capital intensity of the core business.
The overall position reflects a business that balances growth with shareholder returns. While the company is working to strengthen its presence in the mid-premium segment and improve operating efficiency, it continues to generate surplus cash. This allows it to maintain regular dividend payments, making it a relevant example in portfolios where dividend income and reinvestment play a role alongside capital appreciation.
In the last year, VST Industries’ share price has fallen 22%.
VST Industries 1 Year Share Price Chart
#2 Advani Hotels & Resorts (India): Debt-Free Seasonal Compounder
Incorporated in 1987, Advani Hotels & Resorts (India) Is in the hospitality business. Its only property is the Caravela Beach Resort in Goa.
As of March 2026, Radhakishan Damani holds 4.18% stake in Advani Hotels & Resorts India. This has been his shareholding pattern in Advani Hotels & Resorts India for the last eight quarters.
Radhakishan Damani Shareholding Pattern in Advani Hotels & Resorts India (June 2024 – March 2026)
| June-24 | September-24 | December-24 | March-25 | June 25 | September 25 | December-25 | March-26 |
| 4.18% | 4.18% | 4.18% | 4.18% | 4.18% | 4.18% | 4.18% | 4.18% |
Seasonal Resilience: How Caravella Beach Resort Drives Revenue in the Third Quarter
Supported by seasonal strength in the hospitality sector, Advani Hotels & Resorts (India) reported improved performance during the December quarter. Revenue in Q3FY26 stood at Rs 36 crore, compared to Rs 35 crore in the same quarter last year, showing marginal growth on a year-on-year basis. Net profit for the quarter stood at Rs 11 crore, broadly in line with Rs 12 crore reported a year ago, indicating stable earnings despite cost pressures.
The improvement comes after a weak monsoon quarter, highlighting the seasonal nature of the business. Demand generally increases in the second half of the year, especially in leisure-driven destinations like Goa. The company continues to rely on its flagship Caravella Beach Resort, which remains the hub of its operations. Occupancy and pricing trends during peak months support revenue visibility, while providing some stability to repeat customer demand.
Debt-free discipline: financing growth through internal resources
On the operational front, the company maintains a conservative approach. It is largely debt-free and continues to fund upgrades through internal resources. Management has indicated its preference for gradual reforms rather than aggressive expansion. This keeps capital intensity low and supports cash generation over time.
Dividends remain a major attraction.
The company declared an interim dividend of Rs 1.00 per share with the record date of January 30, 2026. This follows earlier payments of Rs 0.90 and Rs 1.00 per share during FY2025, taking the total dividend declared in the last 12 months to Rs 1.90 per share. The company has declared 28 dividends since 2006, showing a consistent track record of returning cash to shareholders.
On a trailing basis, the dividend yield offered by the company is an attractive 3.5%.
The overall situation reflects a business that balances cyclical growth with stable payouts. While performance is linked to tourism demand and seasonality, the consistent dividend track record makes it relevant in portfolios where income generation and reinvestment play a role along with capital appreciation.
In the last year, Advani Hotels & Resorts (India)’s share price is down 13.1%.
Advani Hotels & Resorts (India) 1 year share price chart
Relative Value: Why These Gemstones Are Trading Below Historical Averages
Let’s now turn to the valuation of companies in focus using the enterprise value to EBITDA multiple as a benchmark.
Valuation of companies in focus
| serial number | company | EV/EBITDA ratio | 5-Year Average EV/EBITDA | industry median | ROCE | ROE |
| 1 | VST Industries | 8.8 | 11.9 | 12.5 | 28.2% | 21.1% |
| 2 | Advani Hotels & Resorts India | 13.2 | 14.2 | 14.4 | 45.3% | 34.4% |
Both the companies are performing well in terms of return ratio, but the reasons are different.
VST Industries has recorded return on capital employed (ROCE) of 28.2% and return on equity (ROE) of 21.1%. Its business runs on steady demand and does not require much capital.
Advani Hotels has reported a high ROCE of 45.3% and ROE of 34.4%. This comes from better utilization of its assets and strong performance during good tourism periods.
The valuations of both are below their normal levels. VST Industries is trading at an EV/EBITDA of 8.8, compared to its five-year average of 11.9 and the industry average of 12.5.
Advani Hotels is at 13.2, which is below its five-year average of 14.2 and close to the industry average of 14.4. This shows that despite the stable numbers, prices have not increased much.
Businesses are quite different. VST operates in a stable segment, which helps it generate cash consistently and pay regular dividends. Advani Hotels is associated with tourism, so performance depends on the season and travel demand. Still, it has managed to keep return ratios strong and continue paying out.
VST is more about steady cash flow. Advani thinks more about the demand cycle. Both demonstrate that different types of businesses can still deliver returns and maintain dividends.
conclusion
Dividend investing isn’t always in focus, especially when the market is rising. Still it has its place. It provides regular liquidity to investors. This also helps when prices have not been moving much for a long time.
Radhakishan Damani’s portfolio reflects this thinking. Along with long-term holdings, there are also companies that pay dividends every year. It’s not about high yields. It is more about the steady cash coming back from the business.
The companies here are very different. One runs on steady demand and steady cash flow. The second depends on tourism and travels with bicycles. Still, both have managed to pay dividends and maintain returns over time. That continuity comes through.
For investors the matter is simple. Dividends may add to returns, but the business behind them matters more. These stocks can be monitored to see how they manage cash and payouts going forward.
You can track how these are progressing Adding a stock to your watchlist.
Disclaimer:
Note: We have relied on data www.Screener.in Throughout this article. Only in cases where data was not available have we used an alternative, but widely used and accepted source of information.
The purpose of this article is simply to share interesting charts, data points, and thought-provoking opinions. This is not a recommendation. If you wish to consider any investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
Ekta Sonecha Desai is passionate about writing and has a keen interest in the equity markets. With an analytical approach, she loves to delve deep into the world of companies, studying their performance and uncovering insights that bring value to her readers.
Disclosure: The author and her dependents do not own Stocks discussed in this article.
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