Dividend Stocks.
How to plan dividend stocks purchase:-
Dividend investing is a strategy that gives investors two sources of potential profit: one, the predictable income from regular dividend payments, and two, capital appreciation over time. Buying dividend stocks can be a great approach for investors looking to generate income or those simply looking to build wealth by reinvesting dividend payments. This strategy can also be appealing for investors looking for lower risk.
Stocks that pay dividends can be some of the safest to own. But there can still be pitfalls, and dividend stocks can be risky if you don’t know what to avoid. Not every dividend stock can maintain a payout in every economic environment — something the COVID-19 pandemic has demonstrated — but a diversified portfolio of dividend stocks can get you a steady income.
What are dividend-paying stocks?
Dividend stocks are companies that pay out regular dividends. Dividend stocks are usually well-established companies with a track record of distributing earnings back to shareholders. A dividend can be described as a reward that publicly-listed companies extend to their shareholders, and its source is the company’s net profit. Such rewards can either be in the form of cash, cash equivalent, shares, etc. and are mostly paid from the remaining share of profit once essential expenses are met. However, companies may decide to retain their accumulated profits to reinvest in the business or reserve it for future use
Earnings yield to dividend yield:
To provide consistent dividend to its shareholders, the company has to have a strong cash flow, and maintain consistency in earnings. A company that’s consistent in both, providing dividends and improving its dividend yield is worth investing. The company should provide a dividend only from revenue, the one that goes into the company reserve. Earnings yield is the rate at which a company earns its revenue on a per share basis, and also known as Earnings Per Share (EPS). It is the revenue earned by the company divided on a per share basis. Dividend yield is the earnings an investor earns on a per share basis.
Dividend Policy:
A company is under no obligation to pay dividend to its shareholders. As an investor, be aware of the company’s dividend policy. Check whether payment of dividends is an integral strategy of the company. If yes, look at the payment consistency, the rate of payment and the mode of payment. The consistency of dividend yield must be given prime importance. It is the management and the board of directors who make the decisions, of the company to decide the rate of dividend, if at all. Also do a peer comparison. Infosys is the ideal example of regular paying dividend to its shareholders.
Selecting the best dividend stocks to buy with following points:-
1) The company should at least have a dividend payout ratio of 40%
2) Overall dividend yield should be above 3%.
3) The company should have a fair track record when it comes to offering dividends and paying off debts.
4) EPS of the company should be more than 25 INR
The most dividend paying attractive 20 stocks are:
|
SL |
Name |
Price |
PAT |
Div.Pay |
DY.C |
|
1 |
NLC India |
47.85 |
1,413.85 |
62.36% |
28.23% |
|
2 |
SJVN |
25.35 |
1,651.89 |
63.25% |
31.12% |
|
3 |
TCS |
3,186.10 |
33,260.00 |
33.60% |
0.07% |
|
4 |
Indiabulls Hsg |
165.3 |
2,159.91 |
50.14% |
8.19% |
|
5 |
Coal India |
127.9 |
11,280.88 |
64.12% |
6.73% |
|
6 |
RIL |
1,929.00 |
30,903.00 |
5.86% |
0.02% |
|
7 |
NHPC |
24.1 |
3,007.17 |
69.56% |
24.11% |
|
8 |
HDFC Bank |
1,430.90 |
27,296.27 |
6.53% |
0.01% |
|
9 |
Power Finance Corp |
109 |
5,655.14 |
23.30% |
7.01% |
|
10 |
ONGC |
107.2 |
13,444.54 |
49.71% |
4.44% |
|
11 |
Oil India |
118.9 |
2,584.06 |
41.14% |
7.23% |
|
12 |
REC |
126.8 |
4,886.16 |
32.57% |
5.95% |
|
13 |
ITC Ltd. |
208 |
15,136.05 |
34.93% |
2.26% |
|
14 |
HDFC |
2,569.00 |
17,769.65 |
10.48% |
0.03% |
|
15 |
Bank of Baroda |
67.2 |
12,355.15 |
0.45% |
0.00% |
|
16 |
NTPC Ltd. |
102.15 |
10,112.81 |
26.44% |
2.96% |
|
17 |
Power Grid |
209.85 |
10,811.18 |
18.03% |
2.05% |
|
18 |
GAIL |
139.35 |
6,620.63 |
25.71% |
3.16% |
|
19 |
Infosys |
1,348.10 |
15,543.00 |
41.15% |
0.10% |
|
20 |
Wipro |
469.45 |
8,680.70 |
5.35% |
0.05% |
|
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PAT: Profit After Tax (Rs.Cr) – Net Profit |
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Div.Pay: Dividend Payout (Paid as % of PAT) |
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D.Yield (CY): Dividend Yield (w.r.t. current price). |
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