Best Dividend Stocks in India for Income Investors: Whenever a retail investor, like you and me, buys a stock, then their main aim is to make money through their investment. There are basically two ways by which anyone can earn money by investing in stocks. They are 1) Capital Appreciation & 2) Dividends.
The first one, capital appreciation, is quite simple and hugely famous among investors. Everyone knows this secret to earn in the stock market. Buy low and sell high. The difference is your buying and selling price is capital appreciation or your profit.
For example, suppose you bought 200 stocks of a company at Rs 100, and two years hence, the price of the stock has increased to Rs 240. Here, capital appreciation is Rs 240- Rs 100 = Rs 140 per share or 140%. The overall profit that you made on your investments will be Rs 140*200 i.e. or Rs 28,000.
Almost everyone who enters the market knows this method of earning by stocks. It can also be concluded that most people enter the market hoping that their investment will be doubled or quadrupled and will make them a millionaire one day through capital appreciation. However, there’s also another way to make amazing profits from the market.
Now, let us discuss the second method of making money through your investment in stocks- DIVIDENDS. In this article, we’ll first understand what are Dividends and then discuss the list of the best dividend stocks in India. We are confident that the learnings from this article will be very valuable for you. Keep Reading!
What are Dividends?
“Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” – John D Rockefeller
Whenever a company makes a profit, it can use this profit amount in different ways. First, it can use the profit amount in its expansion like acquiring a new property, starting a new venture/project, expanding in new cities, etc. This strategy is generally used by fast-growing companies and can be considered as self-investment.
Second, it can distribute the majority of the profit among its owners and shareholders. Third and final, the company can distribute some portion of the profit to the shareholders and retain the rest to use for expansion work.
Basically, this amount distributed by the company (from its profit) among the shareholders is called dividends.
What is a dividend? “A dividend is a distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders. Dividends can be issued mostly in terms of cash payments, and sometimes also as shares of stock, or other property.”
Typically, most big and well-established companies give decent dividends to their shareholders every year. They may offer dividends two times a year, namely– Interim dividend and final dividend (However, this is not a hard and fast rule). Dividends are not obligations, but a reward. A few companies may even offer dividends multiple times a year. If you’re holding a stock of these companies and the company announces a dividend, then you’re eligible to receive the dividends as you’re a legal shareholder.
Why are dividends good?
Suppose you are a long-term investor. You have invested in the stocks of a company for the next 15-20 years. Now, if the company does not give any dividends, although your net worth will be increasing, there is no way for you to make money until you sell the stocks. Even though your investment value is growing, however, you won’t receive any cash in your hand unless you sell.
Nonetheless, if the company gives a regular dividend, say 2-4% a year, then you can are receiving some returns from your investments. Here, your capital is growing as you’ve not sold your stocks. Along with it, you’re also receiving some dividends from being a loyal shareholder of the company.
In addition, a regular dividend is also a sign of a healthy company. An entity that has given consistent dividends (moreover year-on-year consistently growing dividends) to its shareholders for the last 5-10 consecutive years, can be considered a financially healthy company. On the contrary, companies that give irregular dividends (or skip dividends in a bad economy or during market crashes) can not be considered financially sound companies. Therefore, big dividend yields can be an incredibly attractive feature of stock for long-term value investors.
Now that we have understood the basics of dividends, let us learn a few of the important financial terms that are frequently used while analyzing dividends (before we look into the best dividend stocks in India).
Must know financial terms regarding Dividends
Here are a few terms that every dividend investor should know. These key terms are frequently used while discussing dividend stocks.
1. Dividend yield: A stock’s dividend yield is calculated as the company’s annual cash dividend per share divided by the current share price. It is expressed in annual percentage.
Dividend Yield = (Dividend per Share) / (Price per Share)*100
For example, if the share price of a company is Rs 100 and it gave a dividend of Rs 5 this year, then the dividend yield will be 5%. Most dividend investors want to invest in higher-yielding stocks. However, please note that a very high dividend yield doesn’t always mean a good dividend stock.
2. Dividend %: This is the ratio of the dividend given by the company to the face value of the share.
3. Payout ratio: It is the ratio of earnings paid out as dividends to shareholders divided by the total earnings by the company in that year. The dividend payout ratio is typically expressed as a percentage and is calculated as follows:
Payout Ratio = Dividends per Share (DPS) / Earnings per Share (EPS)
As a thumb rule, avoid investing in companies with a very high dividend payout ratio. This is because a high payout ratio means the company is not retaining enough money for its expansion or growth. In other words, be cautionary if the payout ratio is greater than 70%.
Overall, if you are looking for a good dividend stock to invest in, search for companies with growing dividends, a steady dividend yield, and a consistent payout ratio. Now, let us move further and discuss the list of the ten Best Dividend Stocks in India or the highest dividend-paying stocks last 10 years in India.
Quick Tip: The fast growing companies/small businesses/startups give less dividend yield to their shareholders as they use the profit amount in their expansion. On the other hand, the Blue Chip stocks, which are large and established company and has already reached a saturation point, gives good regular dividends. Further, the public sector unit (PSU) companies are generally known for giving good dividends. Some industries like Oil and petroleum, Grid, Utility etc give decent dividends to their shareholders.
List Of Top Dividend Stocks in India
Here are the ten top dividend stocks in India or the highest dividend-paying stocks last 10 years in India with a history of consistent dividends over the years. They are worth investigating by intelligent dividend investors.
|Company||Industry||Market Cap (Rs Cr)||Current Price (Rs)||Dividend Yield(%)|
|Vedanta Ltd||Oil & Gas and Metal||101,925||280||25.3|
|Indian Oil Corporation Ltd.||Refineries||108,620||77.0||10.4|
|Power Finance Corporation Ltd.||Finance Term Lending||38,729||147.65||8.82|
|Hindustan Petroleum Corporation Ltd.||Refineries||33,229||233||5.98|
|REC Ltd.||Finance Term Lending||30,045||114.55||9.97|
|Coal India Ltd.||Mining & Minerals||128,708||209||7.64|
|Hindustan Zinc Ltd.||Metal - Non Ferrous||138,886||299.7||14.3|
|CESC Ltd.||Power Generation-Distribution||8,377||63.70||6.21|
|Oracle Financial Services Software Ltd.||IT - Software||27,748||3,211||6.23|
|Indus Towers Ltd.||Telecommunication - Service Provider||38,780||141.8||8.03|
|Oil India Ltd.||Oil Exploration||27,912||250.95||5.96|
|Power Grid Corporation Of India Ltd.||Power Generation-Distribution||154,994||221.05||5.36|
|SJVN Ltd.||Power Generation-Distribution||12,103||31.15||5.01|
|NHPC Ltd.||Power Generation-Distribution||39,256||38.8||4.19|
|Bharat Petroleum Corporation Ltd.||Refineries||73,646||337.3||4.75|
|Sun TV Network Ltd.||TV Broadcasting & Software Production||15,645||400||3.04|
|Sanofi India Ltd.||Pharmaceuticals & Drugs||12,943||5,618||3.24|
|NTPC Ltd.||Power Generation-Distribution||166,734||172.2||4.21|
|Castrol India Ltd.||Lubricants||10,811||109.9||2.51|
|Ambuja Cements Ltd.||Cement & Construction Materials||71,284||359.7||1.66|
Additional Top Dividend Stocks in India
|Company||Industry||Market Cap (Rs Cr)||Current Price (Rs)||Dividend Yield(%)|
|Hero MotoCorp Ltd.||Automobile Two & Three Wheelers||44,949||2,279.35||3.47|
|Bajaj Auto Ltd.||Automobile Two & Three Wheelers||107,301||3,836.35||3.56|
|Redington (India) Ltd.||Trading||12,817||166.3||3.71|
|Tech Mahindra Ltd.||IT - Software||104,258||1076.7||1.46|
|Hindustan Aeronautics Ltd.||Airlines||87,893||2,631||2.03|
|ICICI Securities Ltd.||Finance - Stock Broking||13,657||424.65||4.89|
|NMDC Ltd.||Mining & Minerals||31,684||106.9||12|
|Oil & Natural Gas Corporation Ltd.||Oil Exploration||185,748||148||7.11|
|Torrent Power Ltd.||Power Generation-Distribution||24,557||525.25||2.05|
|Mphasis Ltd.||IT - Software||31,449||1,700||2.22|
|Colgate-Palmolive (India) Ltd.||Household & Personal Products||40,728||1,499||2.76|
|Akzo Nobel India Ltd.||Paints||10,208||2,329||3.35|
|Larsen & Toubro Ltd.||Engineering - Construction||299,810||2,128||1.02|
|LIC Housing Finance Ltd.||Finance - Housing||17,530||319.95||2.20|
|Steel Authority Of India Ltd.||Steel & Iron Products||33,353||81.2||9.93|
|Nippon Life India Asset Management Ltd.||Finance - Asset Management||12,528||202.8||4.56|
|Mahanagar Gas Ltd.||Gas Transmission-Marketing||9,675||984.9||2.94|
Where to find dividend information on a stock?
You can find the details regarding the dividend of stocks on the major financial research websites in India. Most notably, you can use Trade Brains Portal to find the dividend information of a company. Here are the steps to find the dividend details on any stock:
- Go to Trade Brains Portal: https://portal.tradebrains.in/
- Search the name of the company in the Top Search Bar whose stock dividend information you need.
- Go the stock details page of that company
- You can find the dividend yield, payout ratio, and more in the 5-Year Fact sheet!
Further, you can also watch this quick video to understand how exactly to use these websites to find the best dividend stocks in India. Watch here –>
“It is an extra dividend when you like the girl you’ve fallen in love with.” – Clark Gable
An intelligent dividend investor looks for a company that can provide consistent dividends for many long years without any dividend cuts.
They are not interested in those companies giving high dividends just for one year and are not able to sustain giving similar dividends in the future.
That’s why it is really important that the fundamentals of the company should be strong, along with the dividend history.
A bad market, slowdown, or recession should not stop good dividend companies from giving dividends to their shareholders.
That’s all for this article. I hope this post on the Ten Best Dividend Stocks in India or the highest dividend-paying stocks last 10 years in India is useful to the readers. Further, I will highly recommend not blindly investing in stocks based on the list mentioned above.
Do your independent research and invest only when you’ve studied the company enough and are confident about its fundamentals. Besides, if you have any queries, feel free to comment below. I will be happy to help. #HappyInvesting.
Frequently Asked Questions (FAQs)
Which Indian share gives the highest dividend?
A few Indian companies that pay dividends generously in India are Bharat Petroleum Corporation Limited, Indian Oil Corporation Limited, Indus Towers Limited, Hindustan Petroleum Corporation Limited, Coal India Limited, SJVN Limited, REC Limited, Power Finance Corporation Limited, and Oil India Limited. Most high dividend-paying companies are mature profitable firms.
Which company in NSE gives the highest dividend?
Aurum Proptech, Clariant Chem, BPCL, Goodyear, PNB Gilts, KSolves, Kewal Kiran, IOC, REC, Tide Water Oil, Coal India, Indus Towers, Power Finance Corporation Limited are some of the highest dividend-paying companies in the NSE.
What are the safest high-dividend stocks?
Some of the best dividend stocks in India are Bharat Petroleum Corporation Limited, Indian Oil Corporation Limited, Indus Towers Limited, Hindustan Petroleum Corporation Limited, Coal India Limited, SJVN Limited, REC Limited, Power Finance Corporation Limited, and Oil India Limited.
In general, companies that pay dividends on a regular basis, even during a bad economy or during market crashes, are financially sound and are considered to be safe dividend stocks.
How do I choose a good dividend stock?
Details related to good dividend stocks are readily available on financial websites. You can easily find a list of good dividend-paying stocks on financial websites.
Once you have the list, head over to Trade Brains Portal and search the companies’ names one by one. On the stock details page, you will find the dividend yield, payout ratio, and more information in the 5-year fact sheet that will help you to decide.
What is the final dividend?
The final dividend is the dividend that is declared and paid after the close of the financial year. This amount is declared by the board of directors after a company issues its financial statements.
It is declared in the annual general meeting once the board of directors is sure about the soundness of the company’s financial health.
It does not require a special resolution, however, once it is declared, a company cannot reverse its decision.
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