Insurance technology firm Majesco recently announced a dividend of Rs 974, which is nearly 20,000 per cent of face value. The announcement came after the company sold its major overseas business and decided to distribute the amount among shareholders.
The announcement looks lucrative to investors. I too bought 43 shares at Rs 989 per share immediately after the announcement. Thereafter, I just realized that I forget to consider the tax part.
Certainly, the stock price, which was hovering at around Rs 989 at the time of announcement, will adjust after the ex-date. There are expectations that the price will be in between Rs 20-50. Net-net the deal is definitely not lucrative for investors who fall under higher tax brackets.
On the other hand, who are not eligible for income tax can consider these kind of shares.
Lessons: Don’t immediately buy any stock immediately after the lucrative announcement. First, analyse and then react. I just sold all of my holdings in Majesco before the ex-date date and preferred to book a marginal loss instead of paying hefty taxes. Choice is always yours. Enjoy.
Happy Investing ans Stay Safe. Tc
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