For numerous investors, evaluating the dividend amount a company is disbursing stands as a crucial factor they assess prior to determining whether to commit to that company.
Investing in stocks that provide dividends presents an advantageous avenue within the stock market. Despite not garnering the same level of popularity as high-yield bonds, dividend-paying stocks furnish investors with an opportunity to secure a consistent income from their investments.
Dividends necessitate a consideration of their alignment with net profits. Several top-tier dividend-paying enterprises exercise prudence in utilizing their earnings. While distributing rewards to shareholders is commendable, it is imperative that the gains are strategically channeled back into the company. This approach ensures expansion and facilitates the creation of enduring wealth for investors.
This article will delve into forthcoming stocks that offer dividends and explore vital concepts pertaining to dividends.
Factors considered for the selected Dividend Paying Stocks
Considering the significant position held by the Dividend Paying stocks in India, it’s imperative to consider specific factors when contemplating potential investment options.
We have curated the following list of top Dividend Paying stocks in India based on the following factors:
1. Market Cap
We have chosen only those Dividend Paying stocks whose market cap is greater than 3 Crore INR.
2. Price to Earning Ratio
Typically, a stock’s price-to-earnings ratio tends to decrease as its performance improves.
3. Sales
We have selected the following Dividend Paying stocks with an Average Sales Growth (3 years) of more than 10%.
4.Profit
The following list consists of Dividend Paying stocks whose Average Profit growth (3 years) > 10%.
Top Dividend Paying stocks to buy in India
Taparia Tools Ltd
Established in 1969 through a collaboration with a Swedish company, Taparia Tools Ltd offers comprehensive solutions for hand tool requirements. The company’s product range encompasses an array of items including adjustable wrenches, a diverse selection of screwdrivers, various types of pliers, tool sets and kits, hammers, C-clamps, chisels, spanners, punches, pipe wrenches, truck wheel wrenches, sockets, and accessories.
The company’s product profile encompasses an array of tools such as adjustable spanners, pliers, mini pliers, screwdrivers and sets, bits and sets, various tool sets, sockets and socket accessories, torque wrenches, pipe wrenches and vices, hammer clamps, wheel spanners and sets, chisels, punches, magnetic products, cutters, hacksaw blades, Allen keys and sets, gear pullers, tools trolleys, spirit levels, cutting blades, and non-sparking tools.
- Market Cap – ₹ 3.86 Cr.
- Current Price – ₹ 2.54
- High / Low – ₹ 2.54 / 2.10
- Stock P/E – 0.05
- ROE – 27.9 %
The company maintains a nearly debt-free status, with its stock trading at a mere 0.01 times its book value and offering a substantial dividend yield of 1,220%. Demonstrating robust financial performance, the company has achieved a noteworthy profit growth of 37.2% CAGR over the past 5 years, accompanied by a commendable track record of return on equity (ROE) with a 27.6% ROE over 3 years. Moreover, the company upholds a healthy dividend payout ratio of 48.6%. However, it’s worth noting that there are contingent liabilities amounting to Rs. 1.48 Cr.
Narendra Properties Ltd
Established in 1995, Narendra Properties Ltd, headquartered in Chennai, operates within the real estate sector, focusing on the development of commercial and residential properties as well as civil construction.
The company’s business scope encompasses the execution of development ventures ranging from multi-storied residential to commercial apartment complexes, amassing an impressive track record of over 2.5 million+ sq.ft. area developed. Furthermore, the company has ongoing projects such as Grand Melody, a collection of spacious apartments characterized by exclusivity, with only three apartments per floor and 35 in total. Nonetheless, the company has faced challenges in selling these apartments, which remain unsold since construction completion.
- Market Cap – ₹ 16.2 Cr.
- Current Price – ₹ 22.8
- High / Low – ₹ 36.5 / 14.6
- Stock P/E – 3.03
- ROE – 12.8 %
The company has successfully minimized its debt and now maintains a nearly debt-free status, with its stock trading at 0.45 times its book value and offering an attractive dividend yield of 4.38%. The company has achieved impressive profit growth with a 45.1% CAGR over the past 5 years. However, it’s important to note that the company faces challenges, including a low return on equity of -0.34% over the last 3 years, and its earnings include an additional income of Rs. 7.84 Cr.
Power Finance Corporation Ltd
Power Finance Corporation Limited operates as a Systemically Important Non-Deposit taking NBFC, authorized by the RBI as an Infrastructure Finance Company. Its primary focus involves furnishing financial support to the Indian power sector, a role that encompasses extending financial aid to infrastructure projects within the sector. Its range of products and services consists of various fund-based products like Project Term loans, equipment purchase lease financing, and short to medium-term loans to equipment manufacturers, alongside non-fund-based offerings including deferred payment guarantees, Letter of Comfort (LoC), and policies facilitating credit enhancement.
Distinguished as a Maharatna company by the Indian government in October 2021, Power Finance Corporation Limited has been granted this status, granting it elevated financial and operational independence. Additionally, the company holds a majority ownership of approximately 56% by the Government of India, positioning it as a crucial entity in advancing the nation’s power capacity goals. This strategic government involvement has facilitated competitive borrowing rates for PFC due to the sovereign backing it receives.
- Market Cap – ₹ 69,711 Cr.
- Current Price – ₹ 264
- High / Low – ₹ 277 / 101
- Stock P/E – 4.09
- ROE – 20.4 %
The stock is currently valued at 0.83 times its book value and offers an attractive dividend yield of 5.02%. The company has demonstrated strong profit growth with a 18.9% CAGR over the past 5 years and maintains a healthy dividend payout of 22.4%. However, it’s important to note that the company faces drawbacks including a low interest coverage ratio, lackluster sales growth of 9.79% over the past five years, and the possibility of capitalizing interest costs.
Coal India Ltd
Coal India Ltd primarily operates within the coal mining and production sector and additionally manages coal washeries. Its primary customer base includes the power and steel industries, while also serving consumers from diverse sectors like cement, fertilizers, and brick kilns.Having been established in 1973 as Coal Mines Authority Ltd after the nationalization of the coal industry, Coal India Ltd holds the status of a ‘Maharatna’ company under the Ministry of Coal, Government of India, headquartered in Kolkata, West Bengal.
Remarkably, it stands as the world’s largest coal producing company and boasts a prominent position as one of the largest corporate employers. With its operations spanning across 8 Indian states, the company also owns Coal India Africana Limitada, a wholly owned mining enterprise in Mozambique that is yet to commence operations. Leading the nation’s coal production, Coal India Ltd contributes to approximately 80% of the country’s total coal output, with over 80% of its despatches supplying the power sector. Notably, the company’s Board of Directors and its subsidiary have sanctioned 16 mining projects in FY 2021-22, projected to yield a combined annual capacity of 99.84 million tons. Additionally, 5 mining projects, with a capacity of 12.60 million tons per year, were completed in FY22.
- Market Cap – ₹ 1,44,762 Cr.
- Current Price – ₹ 235
- High / Low – ₹ 263 / 208
- Stock P/E – 5.32
- ROE – 56.0 %
The company maintains a nearly debt-free status and offers an attractive dividend yield of 10.3%. With a strong profit growth of 31.9% CAGR over the last 5 years and a robust return on equity (ROE) track record, including a 3-year ROE of 46.8%, the company has consistently upheld a healthy dividend payout of 63.7%. Notably, debtor days have shown improvement, decreasing from 50.6 to 34.5 days. However, there are certain drawbacks, including a recent decrease in promoter holding by -3.00%, lackluster sales growth of 10.2% over the past five years, and significant contingent liabilities amounting to Rs. 70,889 Cr.
Oil & Natural Gas Corpn Ltd
ONGC holds the distinction of being India’s largest company engaged in the extraction of crude oil and natural gas, contributing a significant 71 percent to the country’s domestic production in this sector.Founded by the Indian government in 1956 to spearhead oil exploration, ONGC boasts over 60 years of experience in this field.
As a Maharatna company, ONGC not only holds the distinction of being India’s largest contributor to crude oil and natural gas production, accounting for approximately 71 percent of domestic output, but also ranks as the most profitable PSU in the country. With revenue primarily sourced from crude oil, natural gas, and value-added products, ONGC’s geographical revenue split reveals 93.5 percent from India and the remaining 6.5 percent from international trade. The ONGC Group also encompasses subsidiaries like ONGC Videsh for international operations, Hindustan Petroleum Corporation Limited (HPCL), India’s second-largest oil marketing company, Mangalore Refinery and Petrochemicals Limited (MRPL), and Petronet MHB Limited (PMHBL) involved in the transportation of petroproducts from MRPL refinery in Karnataka.
- Market Cap – ₹ 2,22,923 Cr.
- Current Price – ₹ 177
- High / Low – ₹ 180 / 122
- Stock P/E – 5.55
- ROE – 14.3 %
The stock is presently trading at a valuation of 0.79 times its book value, while concurrently presenting a notable dividend yield of 6.35%, marking a favorable investment proposition for shareholders. The company’s commitment to maintaining a robust dividend payout of 32.2% underscores its dedication to rewarding investors. However, a point of consideration is the presence of contingent liabilities totaling Rs. 76,693 Cr., which merits cautious evaluation of the potential financial impacts.
IIFL Securities Ltd
Established in 1996 as a subsidiary of the IIFL Group, IIFL Securities Limited serves as a prominent provider of a diverse array of financial services to both retail and institutional clients throughout India. These encompass retail and institutional equities, distribution of financial products, commodity and currency broking, investment banking, wealth management, and financial planning. With a strong nationwide presence, the company actively caters to a substantial client base exceeding 3.5 lakh active clients and over 2.4 million customers, served through a widespread network of approximately 2,500 points of contact across 500 cities in India, including branches and business partners.
IIFL Securities Limited’s comprehensive suite of products and services extends to various realms including retail broking encompassing equities, commodities, and currency broking, along with financial planning, depository participant services, distribution of mutual funds and bonds, portfolio management services (PMS), alternative investment funds (AIF), retirement planning, and estate planning. Additionally, the company offers institutional broking with services spanning broking, corporate access, and research support, while also specializing in investment banking activities such as IPOs, qualified institutional placements, rights issues, mergers and acquisitions, advisory services, and more.
- Market Cap – ₹ 2,010 Cr.
- Current Price – ₹ 65.8
- High / Low – ₹ 79.6 / 48.2
- Stock P/E – 7.15
- ROE – 19.7 %
The stock is currently offering an attractive dividend yield of 4.56%, which is supported by the company’s consistent track record of maintaining a healthy dividend payout of 26.7%. However, investors should be aware of a lower promoter holding at 31.1%, suggesting relatively less ownership by the promoters, and the presence of contingent liabilities totaling Rs. 845 Cr., highlighting potential financial obligations that warrant careful consideration.
PTC India Ltd
Established in 1999 through a Public-Private Initiative by the Government of India, PTC India Limited is a significant player in the power trading industry. It is endorsed by esteemed entities such as Power Grid Corporation of India Limited (PGCIL), NTPC Limited (NTPC), Power Finance Corporation Limited (PFC), and NHPC Limited (NHPC), further underscoring its prominence within the sector. The company’s operational scope encompasses various business segments, offering comprehensive energy services involving power trading, renewable energy, advisory services, and investment services, largely facilitated by its subsidiaries. Under the power trading division, PTC is engaged in both power trading and power generation. Within its investment arm, the company participates in equity investment and debt extension for projects encompassing power generation, transmission, distribution, as well as fuel resources and related infrastructure.
Regarding its financial dynamics, PTC India’s revenue distribution demonstrates a predominance of power-related activities, accounting for 94% in FY21, an increase from 92% in FY20, while investment activities constitute the remaining 6%, down from 8% in FY20. Geographically, the company’s revenue streams are primarily concentrated in India, comprising 96% in FY21, albeit with a slight increase from 94% in FY19, while the contribution from international operations stands at 4%, down from 6% in FY19. Notably, a significant portion of PTC India’s power segment revenue (41%) emanates from its three major customers.
- Market Cap – ₹ 3,629 Cr.
- Current Price – ₹ 123
- High / Low – ₹ 127 / 67.5
- Stock P/E – 7.92
- ROE – 9.15%
The company has successfully reduced its debt burden and is currently trading at a valuation of 0.72 times its book value, offering an appealing dividend yield of 6.36%. The consistent maintenance of a healthy dividend payout ratio at 49.0% and a notable reduction in working capital requirements from 87.9 days to 63.2 days highlight positive financial management. However, certain challenges include a lackluster sales growth of 4.58% over the past five years, a relatively low promoter holding at 16.2%, a modest return on equity of 10.3% over the last 3 years, and the potential practice of capitalizing interest costs.
Redington Ltd
Founded in 1993, Redington India Limited has grown from its modest origins of a single brand and product category to become a significant force in distribution and supply chain solutions, representing over 235 international brands in the IT and Mobility sectors and catering to 37 emerging markets.
Renowned as a leading distributor and integrated supply chain solution provider in the realm of technology and communications, Redington plays a pivotal role both within India and on the global stage. As the second-largest distributor of IT products in India, it serves as a premier distributor for more than 200 global technology vendors, and additionally, it capitalizes on its presence in the field of technology product and infrastructure repair and maintenance. Redington’s extensive product portfolio encompasses a wide array of offerings, including PCs, notebooks, tablets, printing solutions, servers, storage, software, networking solutions, security solutions, smart phones, and cloud services. Its geographical footprint extends to key markets such as Turkey, UAE, Singapore, Saudi Arabia, Nigeria, and Qatar, demonstrating a significant global presence.
- Market Cap – ₹ 11,865 Cr.
- Current Price – ₹ 152
- High / Low – ₹ 202 / 135
- Stock P/E – 8.95
- ROE – 21.9 %
Presently, the stock is characterized by an appealing dividend yield of 4.74%, reflecting the company’s commitment to distributing returns to its investors. Furthermore, the company has achieved a noteworthy profit growth with a 23.7% compound annual growth rate (CAGR) over the last 5 years, indicating its strong financial performance and effective strategic management. This positive trajectory is underscored by the company’s consistent practice of maintaining a robust dividend payout of 46.8%, reaffirming its dedication to providing shareholders with consistent value and returns.
Power Grid Corporation of India Ltd
Power Grid Corporation of India Limited, a Maharatna Central Public Sector Undertaking, stands as the nation’s largest electric power transmission entity. As of March 31, 2021, the Government of India holds a controlling stake of 51.34% in the company. Established in 1989 with the aim of establishing extra-high voltage alternating current and high-voltage direct current (HVDC) transmission lines, Power Grid Corporation efficiently facilitates the transfer of substantial power volumes from central generating facilities and power-surplus regions to high-demand centers within and between regions. Operating under the purview of the Ministry of Power, GoI, the corporation undertakes strategically significant projects assigned by the government on a nomination basis.
Notably, Power Grid Corporation of India exhibits robust operational efficacy, surpassing operational benchmarks established by the Central Electricity Regulatory Commission (CERC). In the fiscal year 2021, the system’s availability reached an impressive 99.76%, maintaining a consistently high standard of performance compared to 99.82% in FY20.
- Market Cap – ₹ 1,70,410 Cr.
- Current Price – ₹ 244
- High / Low – ₹ 267 / 186
- Stock P/E – 11.2
- ROE – 19.6 %
Currently offering an attractive dividend yield of 4.53%, the stock aligns with the company’s strong tradition of upholding a healthy dividend payout of 60.0%, indicating its dedication to providing returns to shareholders. It’s worth noting, however, that the company faces challenges including a sluggish sales growth of 8.76% over the past five years, a possibly lower tax rate than expected, and the potential practice of capitalizing interest costs, which require careful scrutiny for their implications on the company’s financial performance.
Banco Products (India) Ltd
Banco Products (India) Ltd, established in 1961, is a prominent manufacturer and supplier of engine cooling modules and systems for automotive and industrial applications on both domestic and international fronts. The company’s inception was promoted by Mr. Mehul K. Patel, a seasoned industry professional with over four decades of experience in the automotive sector. Banco Products boasts a diverse product portfolio that encompasses essential components like radiators, charged air coolers, fuel coolers, oil coolers, AC condensers, deaeration plastic tanks, metal layered gaskets, and elastomeric molded gaskets, all of which play a critical role in enhancing the efficiency of internal combustion engines and electric vehicle systems across various vehicle categories, from passenger cars to heavy commercial vehicles.
The company holds a significant market presence by providing cooling modules to OEM customers spanning diverse industries, while also catering to the automotive aftermarket through an extensive network of dealers throughout India. Banco Products has successfully expanded its reach to the global aftermarket, positioning itself as a supplier to multinational OEMs operating in advanced markets. This strategic approach is reflected in its revenue distribution, which displays a consistent international orientation, accounting for 66% of total revenue in FY22, marking a slight rise from 64% in FY21. Conversely, its India operations contribute approximately 34% to revenue in FY22, experiencing a marginal decrease from 36% in FY21.
- Market Cap – ₹ 3,090 Cr.
- Current Price – ₹ 432
- High / Low – ₹ 445 / 177
- Stock P/E – 11.4
- ROE – 23.8 %
Presently, the stock presents an appealing dividend yield of 5.09%, which aligns with the company’s sustained commitment to maintaining a strong dividend payout ratio of 57.7%, highlighting its dedication to rewarding shareholders. Nonetheless, a notable point to consider is the potential practice of capitalizing interest costs within the company, a factor that warrants careful scrutiny due to its implications for the company’s financial management.
Also read:
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List of Top Dividend Paying stocks to buy in India
|
Rank |
Brand Name |
Market Cap (in INR rupees) |
Price to Earning Ratio |
|
1 |
Taparia Tools Ltd |
₹ 3.86 Cr. |
0.05 |
|
2 |
Narendra Properties Ltd |
₹ 16.2 Cr. |
3.03 |
|
3 |
Power Finance Corporation Ltd |
₹ 69,711 Cr. |
4.09 |
|
4 |
Coal India Ltd |
₹ 1,44,762 Cr. |
5.32 |
|
5 |
Oil & Natural Gas Corpn Ltd |
₹ 2,22,923 Cr. |
5.55 |
|
6 |
IIFL Securities Ltd |
₹ 2,010 Cr. |
7.15 |
|
7 |
PTC India Ltd |
₹ 3,629 Cr. |
7.92 |
|
8 |
Redington Ltd |
₹ 11,865 Cr. |
8.95 |
|
9 |
Power Grid Corporation of India Ltd |
₹ 1,70,410 Cr. |
11.2 |
|
10 |
Banco Products (India) Ltd |
₹ 3,090 Cr. |
11.4 |
Conclusion
While these might constitute the leading dividend-paying stocks in India, it’s crucial to acknowledge that this factor shouldn’t be the sole basis for stock selection. Dividend disbursement may not solely signify financial strength, as companies might even distribute dividends when facing losses. It’s imperative to analyze a spectrum of elements, encompassing profit history, market presence, debt status, managerial competence, and more. Thorough research is essential to ensure a well-informed choice.
Overall, embracing high dividend-paying stocks can offer a consistent income stream and contribute to long-term growth. Nonetheless, a comprehensive evaluation of a company’s financial performance and aligning it with your risk tolerance is paramount before investing. Staying attuned to market trends and exercising informed judgment are pivotal in attaining your financial objectives. By thoughtfully exploring options and adhering to a strategic, long-term investment approach, you can harness the potential advantages of high dividend-paying stocks.
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