Dividend-yielding stocks are considered to be ‘boring’ in nature as the majority of them do not move swiftly. However, such stocks enable investors to ride through the tough and volatile markets, particularly during the high-interest rate regime and subdued global sentiments.
Furthermore, dividend-paying stocks can sometimes emerge as a good bet as compared to traditional risk-free investment options such as Employees’ Provident Fund (EPF), Public Provident Fund (PPF) or bank fixed deposits (FD).
A company, when it pays a dividend to its shareholders, rewards them for staying invested in its business. Dividend payout is a significant part of capital allocation by any company, particularly which are majorly owned by a holding entity.
Domestic brokerage firm IDBI Capital has released a report on the highest dividend-yielding stocks. Select stocks from IDBI’s study have a double-digit dividend yield, which may cushion the investors amid the ongoing bearish turbulence at Dalal Street.
The list is topped by Hindustan Zinc, which has a dividend yield of a little less than 26 per cent and paid a dividend of Rs 75.5 in the last one year. The company is trading a price-to-book (P/B) value of less than 4 times. It is a subsidiary of Vedanta, while the government of India is its second-biggest shareholder.
It is followed by Sanofi India, which is the Indian arm of Sanofi SA, a French multinational pharmaceutical and healthcare company headquartered in Paris. The drugmaker has paid a total dividend of Rs 683 per share in the last 12 months, which pushed its yield to 12 per cent.
REC, formerly Rural Electrification Corporation, is a subsidiary of Power Finance Corporation. It finances and promotes power projects across India. The company has a P/B value of less than one but its dividend yield is more than 11 per cent as the company paid Rs 13.1 as a dividend in the last 12 months.
Coal India, another state-owned company, features in this list. It has a dividend yield of around 11 per cent as it paid Rs 23.3 as a dividend in the last 12 months. It is followed by Swaraj Engines, which has a dividend yield of more than 10 per cent, paying Rs 160 as a dividend in the last 12 months.
Housing & Urban Development Corporation (HUDCO) and GAIL (India) also make to this list with a dividend yield of little less than 10 per cent in the last one year. These companies have paid Rs 12.26 and Rs 15.95 as dividends to their investors in the given period.
In its report, IDBI Capital has considered only those companies which have a market capitalization more than Rs 800 crore and the company should have a positive bottom line for the last 3 years and the one-off special dividends are not taken into consideration while consistent special dividends are considered.
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