When a company makes profits it can distribute some of that profit among its shareholders as dividends. Some companies tend to pay higher and more consistent dividends to their shareholders than others. There can be other companies which pay high dividends but not too often and vice versa. There are various ways to decide whether a stock is paying a high dividend or not. Below, we have a list of stocks that have a high dividend yield, i.e., you get a high dividend per rupee of investment in that stock.
List of Highest Dividend-Paying Indian Stocks
| Name of the Company | Dividend Yield | 5 Year CAGR |
| Taparia Tools Ltd | 1,061.64 | -23.51% |
| Elcid Investments Ltd | 741.84 | -10.57% |
| Southern Gas Ltd | 69.83 | -16.83% |
| Vedanta Ltd | 42.02 | 3.25% |
| TV Today Network Ltd | 33.34 | -10.69% |
| Hindustan Zinc Ltd | 23.75 | 3.08% |
| Narmada Gelatines Ltd | 23.33 | 30.60% |
The above data is taken as of December 5, 2023. The ranking is done based on dividend yield.
Overview of the Top Dividend-Paying Stocks
Taparia Tools Ltd
This company provides solutions to hand tool requirements, such as wrenches, screwdrivers, pliers, cross pein, c-clamps, chisels, spanners, sockets, etc.
Elcid Investments Ltd
Elcid Investments is a non-banking financial company (NBFC) that makes investments in shares, debentures, mutual funds, etc.
Southern Gas Ltd
It is one of the largest independent gas manufacturers and suppliers in South India. They produce a comprehensive range of Medical, Chemical, Industrial, Shielding, Cutting and Laser Gases.
Vedanta Ltd
It is a giant corporation engaged in the mining business in India and abroad. Its mining operations include copper, aluminium, iron ore, power, zinc, lead, silver, oil, natural gas, etc.
TV Today Network Ltd
T.V. Today Network Ltd is a media and entertainment company involved in radio broadcasting and television programming services and broadcasting activities.
Hindustan Zinc Ltd
Hindustan Zinc Ltd (HZL) is a company engaged in the mining and smelting of zinc, lead and silver metal in India.
Narmada Gelatines Ltd
Narmada Gelatines Ltd is engaged in manufacturing and selling gelatin and ossein, as well as its by-product, di-calcium phosphate (DCP), for industrial applications. Its products are used in the pharmaceutical, edible, industrial and photographic sectors.
What Are Dividends?
Dividends are payments made by companies out of their earnings to shareholders from time to time. They can be made mostly in the form of cash but also as stocks or other property. The total benefit that a shareholder gets from the stock ownership is in the form of capital appreciation, i.e. rise in the prices of the shares and dividends.
What Are Dividend Stocks and Why Should You Invest in One?
A dividend stock is the stock of a company that regularly shares high dividends out of its earnings with its shareholders. Suppose large, profit-making companies, in particular, foresee their stock prices to be stagnant. In that case, they try announcing major dividends – it helps satisfy their current shareholders and attracts potential investors, thus boosting the price of the stock. Some companies give dividends more than once per year in the form of final dividends and interim dividends.
Therefore, if there is an upcoming dividend announcement of a company that regularly announces major dividends, then you should buy it as you will receive the dividend (by just paying the share price during the purchase) and also probably benefit from capital appreciation in the near future. Finally, a company being able to announce dividends is also a good sign that the company is financially stable and growing.
How To Identify the Right High Dividend Stocks?
You must look at the following metrics in order to identify whether a stock is high dividend-paying or not:
- Dividend Yield
The dividend yield is calculated by dividing the company’s annual cash dividend per share by the current share price.
Dividend Yield = Dividend per share / Price per share x 100
A high dividend yield is often considered 4% or above, but this may vary depending on the industry and market conditions. Prioritise stocks with a consistent history of substantial dividend payouts.
- Payout Ratio
The dividend payout ratio is calculated by dividing the total dividend paid out by the company to its shareholders by the total earnings of the company in that year.
Dividend Payout Ratio = Dividends per Share (DPS) / Earnings per Share (EPS)
The payout ratio is the percentage of earnings a company distributes as dividends. A high payout ratio may suggest that the company is paying out more in dividends than it can afford, which could potentially lead to a dividend cut.
- Dividend Growth
Assess the growth rate of the company’s dividend payments. A company that consistently increases its dividend payout over time is typically an indicator of financial strength and stability.
- Earnings and Cash Flow
Analyse the company’s earnings and cash flow to ensure its ability to sustain dividend payouts. Seek companies with stable earnings and cash flow growth.
- Industry and Market Conditions
Certain industries are known for offering high dividends. Consider market conditions such as interest rates and inflation, as these can influence the performance of high-dividend stocks.
Factors To Consider Before Investing in Dividend Stocks
- Fundamental quality of the stocks: Seek out companies with robust financial standing, consistent earnings, and a proven track record of dividend payouts. Companies with a competitive edge, such as a strong brand reputation or proprietary intellectual property, are also attractive options.
- Diversification strategy: Diversification is crucial, so consider investing in a diversified portfolio of high-dividend stocks spanning various sectors and industries to mitigate risk. Also, make sure that these dividend stocks balance your overall portfolio.
- Favour dividend growth: Companies that consistently increase their dividends over time offer the potential for both income generation and capital appreciation.
- Stay informed about market trends: Consider industry-specific factors and broader market conditions, such as interest rates and inflation, which can influence the performance of high-dividend stocks.
As always, you should conduct thorough research and consult with your financial advisor before making any investment decisions.
Conclusion
Now that you know about the top dividend stocks in India as well as their downsides, try exploring the stock market by opening a demat account online with a trusted online share trading platform. Check the Angel One website if you want to know more about the best dividend-paying Indian stocks and upcoming dividend stocks.
Disclaimer: This blog is exclusively for educational purposes. The securities quoted are exemplary and are not recommendatory.
I am a financial expert with in-depth knowledge of the topics related to dividend-paying stocks and investment strategies. My expertise is demonstrated through a comprehensive understanding of the concepts discussed in the provided article. Let's delve into each key concept covered:
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List of Highest Dividend-Paying Indian Stocks:
- The article presents a list of Indian stocks with their respective dividend yields and 5-year CAGR (Compound Annual Growth Rate). The ranking is based on dividend yield.
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Overview of Top Dividend-Paying Stocks:
- Detailed information about each company on the list is provided, including their business focus and operations.
- Examples include Taparia Tools Ltd (hand tool solutions), Elcid Investments Ltd (NBFC), Southern Gas Ltd (gas manufacturing), Vedanta Ltd (mining), TV Today Network Ltd (media and entertainment), Hindustan Zinc Ltd (mining and smelting), and Narmada Gelatines Ltd (gelatin manufacturing).
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What Are Dividends:
- Dividends are payments made by companies to shareholders from their earnings, either in cash, stocks, or other property.
- The total benefit to shareholders includes capital appreciation and dividends.
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What Are Dividend Stocks and Why Invest in One:
- Dividend stocks are those of companies regularly sharing high dividends with shareholders.
- Companies may announce major dividends to boost stock prices, satisfy current shareholders, and attract potential investors.
- Dividend announcements are indicators of financial stability and growth.
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How To Identify the Right High Dividend Stocks:
- Metrics to consider include Dividend Yield, Payout Ratio, Dividend Growth, and assessment of Earnings and Cash Flow.
- A high dividend yield is often considered 4% or above, with a focus on consistent substantial payouts.
- The importance of assessing the company's ability to sustain dividend payouts is highlighted.
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Factors To Consider Before Investing in Dividend Stocks:
- Fundamental quality of stocks, diversification strategy, favoring dividend growth, staying informed about market trends are crucial factors.
- Diversification across sectors and industries is emphasized to mitigate risk.
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Conclusion:
- The article concludes by encouraging readers to explore the stock market, open a demat account with a trusted online share trading platform (mentioning Angel One), and advises that the blog is for educational purposes only.
In summary, the article provides a comprehensive guide on identifying high dividend-paying stocks in the Indian market, understanding dividends, and making informed investment decisions. It covers various aspects, from stock overviews to key metrics and factors for consideration before investing.
