Introduction – Highest Dividend Paying Stocks in india
While the market is bearish and the values of portfolios are declining, investors turn towards the highest dividend-paying stocks in India to generate consistent income and to protect their portfolios from going into negative territory. The highest dividend paying stocks in India tend to fare better in bearish as well as sideways markets as compared to other stocks.
The dividend is the cash that is distributed by the company to its shareholders from its profit earnings. The dividend to be paid is decided by the company’s Board of Directors and it requires the approval of the shareholders. Dividends may be paid quarterly or annually. Stocks of well-established companies that have been distributing dividends consistently to their shareholders are called Dividend Stocks.
Dividends may be distributed in the form of shares, cash, cash equivalents, etc. It is a portion of the profit that remains after all the expenses have been met. The company may, however, retain the profits and reinvest them in the business or keep it as a reserve for use in the future.
Top dividend paying stocks are generally a part of defensive sectors that are most likely to weather the heightened volatility and economic downturns better than the cyclical sectors. Businesses that don’t need to reinvest their profits in their business and can return them to shareholders instead in line with clear pay-out policies are considered to be safe-haven stocks in bearish markets.
Investing in high dividend yield stocks is a strategy that gives investors two sources of potential profits: one, predictable income from regular dividends, and two, capital appreciation of the stocks over time. This strategy can be especially appealing for investors looking for a low-risk appetite. This strategy works best when investors reinvest the dividend income to increase their holdings in the stock.
Although top dividend paying stocks might seem like low-risk investment opportunities, one must be careful while deciding which ones to invest in. Some stocks might not be able to maintain their dividend payouts in all cycles of the economy. Diversified portfolios of high dividend yield stocks would ensure a steady income as compared to picking dividend stocks of the same sector.
Before we proceed, it would be prudent to understand the different important terms that every investor should know before investing in the top dividend paying stocks.
Dividend Yield: It is the ratio of the dividend paid per share to its current market price. It is calculated as:
Dividend Yield = (Cash Dividend per Share) / (Market Price of Share) * 100
Record Date: The shareholders that hold the stocks of the company on this date are eligible for receiving dividends.
Ex-Date: It is a date one day before the record date. If a shareholder buys the stock on the ex-date or after it, they are not eligible for receiving dividends.
Dividend Payout Ratio: It is the percentage of the income that is distributed as a dividend to the shareholders.
Top 10 Highest Dividend Paying Stocks in India.
REC Ltd
REC Ltd., incorporated in 1969, is a Navratna company whose administrative control lies with the Ministry of Power and is one of the highest dividend paying stocks in India. It is a Public Infrastructure Finance Company that promotes and finances power projects across the country. It operates in the Term Lending Institutions sector and is a part of the Term Lending – Power Industry.
It is a large-cap company with a market capitalization of ₹24,824 Crore. Its PE Ratio is 2.47 and the Earnings Per Share is 50.81.
REC has the highest dividend yield of 13.8% and a dividend payout ratio of 30.11%.
SAIL
Steel Authority of India (SAIL) Ltd. is a New Delhi-based steel producer. It is under the ownership of the Ministry of Steel, Government of India. It was incorporated in the year 1973 and is a Large Cap company with a market capitalization of ₹28,872.37 Crore. It operates in the Metals – Ferrous sector. Its operations fall under the Steel–Integrated Industry.
Its PE Ratio is 2.36 and the Earnings Per Share is 29.64.
SAIL has a dividend yield of 9.1% and a dividend payout ratio of 29.5%.
PFC
Power Finance Corporation Ltd. (PFC) was incorporated in 1986 and is a Large Cap company that has a market capitalization of ₹27,958.46 Crore. It operates in the Term Lending Institutions sector.It is a financial institution under the ownership of the Ministry of Power, Government of India. Its key revenue segments include Interest, Dividend, Fees& Commission Income. It comes under the Term Lending – Power Industry.
Its PE Ratio is 1.99 and the Earnings Per Share is 53.08.
PFC has a dividend yield of 11.33% and a dividend payout ratio of 7.06%.
PTC India
PTC India Ltd. was incorporated in 1999. It is a Small Cap company with a market capitalization of ₹2,239.30 Crore. PTC India operates in the Power sector. It provides power trading solutions, cross-border power trading, and consultancy services. Its key revenue Segments include Electricity, Other Operating Revenue, and the Sale of services. It is a part of the Power – Trading and Allied Services Industry.
Its PE Ratio is 5.25 and the Earnings Per Share is 14.40.
PTC India has a dividend yield of 9.91% and a dividend payout ratio of 52.07%.
Coal India
Coal India Ltd. was incorporated in the year 1973and is a Large Cap company with a market capitalization of ₹112,932.00 Crore. It operates in the Mining sector. It is mainly engaged in the mining and production of coal and it also operates coal washeries. It is a part of the Mining/Minerals Industry.
Its PE Ratio is 6.51 and the Earnings Per Share is 28.17.
Coal India Ltd. has a dividend yield of 9.55% and a dividend payout ratio of 42.60%.
Hudco
Housing and Urban Development Corporation Ltd. (HUDCO) was incorporated in 1970. It is a Mid Cap company that has a market capitalization of ₹6,976.62 Crore. It operates in the NBFC sector. It provides long-term finance for the construction of houses for residential purposes or finance or undertakes housing and urban development programs in India. It is a part of the NBFC – Housing Industry.
Its PE Ratio is 4.06 and the Earnings Per Share is 8.57.
HUDCO has a dividend yield of 6.24% and a dividend payout ratio of 40.82%.
PNB Gilts
PNB Gilts Ltd. is a subsidiary of Punjab National Bank. It was incorporated in the year 1996. It is a Small Cap company that has a market capitalization of ₹1,116.96 Crore. It operated in the Financial Services sector. It is a primary dealer in the Government Securities market. It is also an agency that provides remote e-voting facilities to the National Securities Depository Limited (NSDL). It is a part of the Broking and Allied Services Industry.
Its PE Ratio is 6.74 and the Earnings Per Share is 9.21.
PNB Gilts Ltd. has a dividend yield of 16.12% and a dividend payout ratio of 54.31%.
IOCL
Indian Oil Corporation Ltd.(IOCL) was incorporated in the year 1959. It is a Large Cap company that has a market cap of ₹105,273.83 Crore. It operates in the Gas & Petroleum sector. It mainly produces Petroleum Products and Petrochemicals. It falls under Oil Refining and Marketing Industry.
Its PE Ratio is 4.19 and the Earnings Per Share is 17.78.
IOCL has a dividend yield of 11.27% and a dividend payout ratio of 27.07%.
ONGC
Oil and Natural Gas Corporation Ltd. (ONGC) was incorporated in the year 1993. It is a Large Cap company that has a market capitalization of ₹164,864.56 Crore. It operates in the Gas & Petroleum sector. It is engaged in the exploration, development, and production of crude oil, natural gas and value-added products. It is a part of the Oil Drilling and Exploration Industry.
Its PE Ratio is 3.62 and the Earnings Per Share is 36.19.
ONGC has a dividend yield of 5.61% and a dividend payout ratio of 24.18%.
RITES
Rites Ltd. (RITES) was incorporated in the year 1974. It is a Mid Cap company that has a market capitalization of ₹5,641.09 Crore. It operates in the Services sector. While it is known as a Railway Consulting firm, this company also provides consultancy, engineering, and project management services in the field of highways, airports, ropeways, ports, inland waterways, urban transport, and renewable energy. It operates through the four segments Turnkey Construction Projects, Consultancy Services, Export of Rolling Stock, equipment and spares, and Leasing of Railway Rolling Stock & Equipment. It is a part of the Project Consultancy/Turnkey Industry.
Its PE Ratio is 10.92 and the Earnings Per Share is 21.49.
RITES Ltd. has a dividend yield of 7.44% and a dividend payout ratio of 34.9%.
Conclusion – Highest Dividend Paying Stocks in India
This list above includes the highest dividend paying stocks in India that investors should buy if they desire consistent dividend income. The dividend yield is the most important factor that is taken into consideration while studying the best dividend paying stocks. But investors must also ensure that the company is consistently growing and making profits.
A company that has a fair track record of paying consistent dividends should be chosen. But not one that does not retain some parts of the earnings for the company’s long-term growth. Simply selecting a company that gives out dividends is insufficient. The share price also needs to grow steadily for capital appreciation and to aid the growth of investor wealth.
