10 Best Dividend Stocks in India That Will Make Your Portfolio Rich 2018

10 Best Dividend Stocks in India That Will Make Your Portfolio Rich.

Best Dividend Stocks in India for Income Investors (Updated: April 2020): Whenever a regular 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 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.

Now, let us discuss the second method of making money through your investment in stocks- DIVIDENDS.

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 is for 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, etc. This strategy is generally used by fast-growing companies. Second, it can distribute the majority of the profit among its owners and shareholders. Third and final, it can distribute some portion of the profit to the shareholders and use the remaining in carrying out its expansion work.

Basically, this amount distributed by the company (from its profit) among the shareholders is called DIVIDEND.

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 as cash payments, as shares of stock, or other property.”

Typically, most big and well-established companies give decent dividends to their shareholders. They may offer dividends two times a year, namelyInterim dividend and final dividend. However, this is not a hard and fast rule. A few companies, like MRF, give dividends three 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.

Read more: Dividend Dates Explained – Must Know Dates for Investors

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, there is no way for you to make money until you sell the stocks. On the other hand, even though your investments might be growing, however, you won’t receive any cash in the hand unless you sell.

Nonetheless, if the company gives a regular dividend, say 3-4% 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 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 a consistent (moreover growing) dividend to its shareholders for the last 5-10 consecutive years, can be considered a financially strong company. On the contrary, the companies that give irregular dividends (or skips dividends in a bad economy or market crashes) can not be considered as a financially sound company. Therefore, big dividend yields can be an incredibly attractive feature of stock for the 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).

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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%. Please note that a high dividend yield doesn’t always mean a g 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. Dividend payout ratio 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, search for companies with growing dividends, steady dividend yield, and consistent payout ratio. Now, let us move further and discuss the list of ten Best Dividend Stocks 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.

Best Dividend Stocks in India (Updated April 2020)

Here are the ten best dividend stocks in India with a history of consistent dividends over the years. They are worth investigating by intelligent dividend investors.

Company NameLast Price (Rs)Market Cap (Rs Cr)Dividend (5 Yr Avg)Div Payout (5 Yr Avg)Div Yield (5 Yr Avg)
Hindustan Petroleum190.129,386.9224.3837.94.58
Indial Oil Corp75.8571,594.6813.9749.164.12
Power Grid166.6587,184.444.3731.162.4
Rural Electrification102.8519,828.1811.2227.65.08
Oil India85.459,266.2410.3533.543.22
Power Finance88.623,655.138.7232.624.8
National Aluminum Co.28.655,344.993.5635.62
Hindustan Zinc187.2577,851.5017.9291.688.4
NTPC9392,019.384.28235.542.8
BPCL316.668,678.5425.239.384.24

Additional Top Dividend Stocks in India

Company NameLast Price (Rs)Market Cap (Rs Cr)Dividend (5 Yr Avg)Div Payout (5 Yr Avg)Div Yield (5 Yr Avg)
ONGC77.6198,377.788.13639.643.88
Coal India130.780,546.8619.52108.286.16
Hero MotoCorp2177.6943,768.8979.849.182.54
GAIL Ltd86.6540,549.696.16232.521.84
Tata Steel Ltd271.4531,181.239.847.582.22
Infosys693.92,95,531.4934.951.43.04
Bajaj Auto2683.777,648.755640.482.12
JSW Steel179.1543,304.505.816.31.24
Castrol India120.2212,062.357.980.322.26
NMDC75.122,994.496.90470.025.9

Quick Note: If you are interested to know more about other high dividend yield stocks, then you can find it here: BSE TOP DIVIDEND STOCKS

Where to find dividend information of a stock?

You can find the details regarding the dividend of stocks on any of the major financial websites in India. Here are a few reliable financial websites to get these pieces of information in India:

  1. Money Control: http://www.moneycontrol.com/
  2. Economic times- Market: http://economictimes.indiatimes.com/markets
  3. Screener: https://www.screener.in/
  4. Investing.com: https://in.investing.com/
  5. Market Mojo: https://www.marketsmojo.com/markets

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 –>

Note: Are you new to stock market investing and confused where to start? Here’s an amazing online course for the newbie investors: INVESTING IN STOCKS- THE COMPLETE COURSE FOR BEGINNERS. Enroll now and start your stock market journey today!

Closing Thoughts

“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. He/She is not interested in those companies giving high dividends just for one year and 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 ‘Ten Best Dividend Stocks in Indiais useful to the readers. Further, I will highly recommend not investing in stocks based on the list mentioned above. Do your independent research and invest only when you’ve studied the company enough and confident about its fundamentals. Besides, if you have any queries, feel free to comment below. I will be happy to help. #HappyInvesting.

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Comments
  • Anurag says:

    The blog is very informative and has cleared a lot of my misconceptions and doubts on the Indian Stock Market. I just wanted to know why didn’t you include Maruti in the list of highest dividend paying stocks?

  • RAM RAM says:

    Good Info and I appreciate your interest in stock market.

    Noida Toll was once a good dividend yield stock but they lost their business due to the court order to make Noida highway toll free so we have to wait and see whether they get any compensation or not.

    Stock crashed from 25 rs to 13 and no more dividends after 2016

  • Vasista says:

    Please check the dividend yield for IOC and HPCL. Looks like you took the stats from moneycontrol which are not updated after issuing bonus. It should be half of what you mentioned. anyways appreciate your effort.

  • Naveen says:

    This is excellent! I can say I have cleared many doubts about dividends. Thanks

  • DR. SONDARVA PRAKASH CHHAGANLAL says:

    Hi kritesh
    Develop screener with deepest analysis .
    U can .

  • Damodaram Geeni says:

    Good informative,thanks

  • SUSHIL VASUDEVAN says:

    HI KRITESH,

    CAN YOU TELL ME AN OPENION ABOUT GITANJALI GEMS

    THANKS
    SUSHIL

  • R ARJUN RAJ KUMAR says:

    it’s not gitanjali gems anymore..its gitankali gone’s

  • Hemant says:

    Hi kritesh i have 2lac ruppes and i want to invest in ioc equity share for good dividend what is your opnion

  • N.g. says:

    I invest my 15 minitues in ur blog, to read,then I earn multibager idea ,thanks

  • Dev says:

    Hi,

    Thanks for the highly informative and good information.
    I have good shares of IOCL. Please let me know if I should change to any other company to earn money by good dividend.
    Please advise few good stocks like MRF.

    Thanks,
    Dev

  • Very nice content. Easy to understand. Thanks for the Stock dividend list…

  • R K Acharya says:

    Please check the dividend yield for IOC and HPCL. Looks like you took the stats from moneycontrol which are not updated after issuing bonus. It should be half of what you mentioned. anyways appreciate your effort.

    Yes this comment is correct.
    Colgate is another example.

  • DB DESAI says:

    Would it be a good idea to invest in Dividend Yield Funds of Mutual Funds for the investor who does not have the required skill, time, inclination and understanding of stock selection, follow up and management of the portfolio.

  • Nilesh Raut says:

    Thanks ! Good information for new comers like me….very useful information.

  • Vishal says:

    Hi Kritesh, Thanks for you elaboration on dividends and earnings. Indeed it was helpful. Kindly advise, If I have 50K, is it adviseable to invest in 2 fundamentally strong companies for dividend earnings or diversify there as well for minimising the risk on capital depreciation and invest in 5 to 6 companies.

  • Usmani M Tanzeem says:

    Hi Kritesh,
    Very informative. Thank you.
    I learnt REIT are good for dividend. Any comment please.
    Usmani M Tanzeem

  • Clement Leong says:

    Hi. I want to open demat account. If I have icici bank a/c should I open with them ? But seeing here in your blog, it’s costly to make any trade with them. Is it? I would like to ask what is I secure plan

  • Hemant P says:

    Can I shift from ICICI Demat to Zerodha without hassle….will it be good to move from stable platform to Zerodha

  • Amol Pagare says:

    Very informative, do i need to hold the shares for a period of time ? If yes then how long. M totally new and clueless about stock market

  • Pen Hopes says:

    Great amount of knowledge achieved from you, Thank You, Post covid, what would be the stocks with growing dividends, steady dividend yield, and consistent payout ratio

  • Mathi says:

    Why ITC is not included?

  • Namrata Tawade says:

    Hello Kritesh Abhishek, appreciating ur efforts.. Thnx for that. Basically m finding stock for Covered Call strategy (buying in Cash and selling its options in FNO with same qty both sides), for that I want fundamentally strong stock and which also gives good dividend to wch I can keep in y portfolio for long term. Will u give any suggestion of stock for same. Thanx in advance!!!

  • Shekhar More says:

    It’s being very greatfull that you are an Engineer and now you are best in stock market. you are best inspiration for us to study and investing the share market.

  • aryan says:

    why have u not included tcs in the list

  • Omkar Nalavade says:

    Thank You very much for sharing your valuable learning, research and experience in investing. My doubt will maybe a silly doubt but I don’t want to take risk so that’s why asking. In the table that you have shared, in one column it is said “Dividend (Avg. 5 Year)” let’s take an Stock for example i.e HP – it’s dividend 5 year avg. is 24.38, so my question is, is that value in “%” or “RS”? I know it’s a silly doubt but don’t want to take the chance. Looking forward to hear from you. Thank You.

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