What are dividend stocks?
Dividend stocks are the shares that regularly spoil a part of their profits by the company. These investors provide passive income and ensure better returns on their investment.
Importance of Dividend Stocks
- Regular Income: Dividend stocks give regular income to consumers, which are particularly useful for customers.
- Low Risk: Investors giving dividends are typically stable and prestigious competitive.
- Stability in Portfolio: These stock market outlooks also provide stability in the stock market.
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Profit in the long run: Through reinvestment, investors can quickly increase their assets.
Top 10 dividend stocks in India
Here is a list of 10 major dividend stocks in India, which can be attractive options for investors:
1. Coal India Limited
- Area: Coal mining
- Dividend Yield: about 8-10%
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Features:
- It is the world’s largest coal mining company.
- This is a safe option due to government operation.
- The company regularly provides a huge portion of its dividend to shareholders.
2. Indian Oil Corporation (IOC)
- Area: Petroleum
- Dividend Yield: 7-9%
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Features:
- India’s largest oil company.
- Due to the fuel demand, its performance is constantly stable.
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It provides a strong dividend to investors.
3. NMDC Limited (NMDC Limited)
- Area: Mining and mining
- Dividend Yield: 6-8%
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Features:
- It is India’s largest iron ore-producing company.
- This company owned by the government has a focus on high cash flow.
- It regularly delivers dividends.
4. Bharat Petroleum Corporation Limited (BPCL)
- Area: Petroleum and gas
- Dividend Yield: 6-7%
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Features:
- The company’s focus is on high dividend distribution.
- This is a trustworthy option, especially for investors
- who want long-term profit.
5. Power Finance Corporation (PFC)
- Area: Financial Services
- Dividend Yield: 8-10%
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Features:
- This provides financial assistance to the power sector.
- It’s famous for high dividend and attractive returns.
6. REC Limited
- Area: Financial Services
- Dividend Yield: 8-9%
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Features:
- The company is known for financing power infrastructure.
- Its dividend distribution policy is strong.
7. Hindustan Zinc Limited
- Area: Metal and minerals
- Dividend Yield: 10-12%
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Features:
- It is one of the world’s largest zinc-producing companies.
- It’s popular for giving investors high dividend
8. Sanjivani Logistics
- Area: Transport and logistics
- Dividend Yield: 5-7%
- Features:
- Due to giving regular dividends of the company
- It is suitable for long-term investment.
9. ITC Limited
- Area: FMCG and Hotels
- Dividend Yield: 4-5%
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Features:
- It is one of India’s most trusted and profitable stocks.
- The company’s strong business and dividend policy make it attractive for investors.
10. Grasim Industries Limited
- Area: Miscellaneous Business
- Dividend Yield: 3-4%
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Features:
- It’s part of the Aditya Birla group.
- It’s a favorite of investors due to its stable dividend distribution and diverse business model.
Benefits and Risks of Dividend Investment
Advantages:
- Regular Income: Investors from dividends receive additional income.
- Low Risk: Reduces investment risk in stable companies.
- Reinvestment: Reinvesting dividend benefits compounding.
Risk:
- Fall of stock price: The stock price may fall due to market volatility.
- Low Dividend: Dividend may decrease if the company’s profits.
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Tax effect: Tax on dividends can affect investors’ returns.
List of Top 30 Dividend Stocks in India
Investors in India prefer stocks giving dividends for regular income and long-term profit. These stocks are considered safe options due to financial stability and strong performance. Below is the list of the top 30 dividend stocks in India:
Top 30 dividend stocks
- Coal India Limited
- Indian Oil Corporation (IOC)
- NMDC Limited
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Power Grid Corporation of India
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Bharat Petroleum Corporation Limited (BPCL)
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Grasim Industries Limited
- Hindustan Zinc Limited
- REC Limited
- Power Finance Corporation (PFC)
- ITC Limited
- Nestle India Limited
- Tata Consultancy Services (TCS)
- HDFC Bank
- Infosys Limited
- Mahindra & Mahindra Limited (M&M)
- Asian Paints
- Sun Pharmaceuticals
- Divis Laboratories
- Tata Steel
- ONGC
- Cipla Limited
- State Bank of India (SBI)
- IndusInd Bank
- Adani Ports and SEZ
- Dabur India Limited
- Kotak Mahindra Bank
- Tata Motors
- Larsen & Toubro
- Hero MotoCorp Limited
- Maruti Suzuki India Limited
Benefits of dividend stocks
- Regular Income: Investors get a stable cash flow.
- Low Risk: These stocks are financially connected to strong companies.
- Portfolio stability: These shares also provide stable returns in market volatility.
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Suitable for long-term: These stocks are better for long-term investment.
What are the key factors that make a stock a High dividend Payer?
The main factors that make a stock a high dividend
Dividend is a way of sharing investors with the companies a part of their profits with shareholders. Some stocks give more dividends than others, and there are several major factors affecting it. The main factors that make a stock a high dividend here
1. Company profit and cash flow
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High Profit:
- The higher the net profit of a company, the more capacity it has to pay its shareholders as a dividend.
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Strong cash flow:
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Companies whose cash flow is stable and strong are able to provide higher dividends.
2. Stability and maturity of business
- Mature Industry: Mature companies, such as utilities, energy, or FMCG, give a huge portion of their profits in dividends.
- Low-growth Business: Companies that aren’t expanding rapidly are delivering their surplus cash into dividends instead of investing.
3. Dividend Policy
- Dividend Payout Ratio: The dividend payment ratio is the percentage the company distributes as its dividend. A high ratio indicates that the company prioritizes the shareholders.
- Regular Dividend Policy: Some companies provide regular and high dividends to show loyalty to their shareholders.
4. Loans and financial stability
- Low Loan: Companies that have low debt can allocate more resources for dividend payments.
- Strong Balance Sheet: Financially stable companies are more trustworthy in their dividend payments.
5. Industry and market situation
- High demand industry: In regions that have stable and high demand (such as energy, mining, and FMCG), companies provide stable dividends.
- Economic Stability: Companies in countries or markets that have economic stability are more capable of giving dividends.
6. Promoter’s view and ownership
- Promoter’s share: If the promoter has a high stake in the company, they prioritize dividend distribution.
- Shareholders’ Return: Some companies give high dividends to attract and maintain their shareholders.
7. Tax Benefits and Dividend Yield
- Dividend Yield: Companies whose dividend yield is higher attract investors
- Tax Benefits: Some companies try to increase dividends to pay tax profit to their investors.
8. Competitiveness and need to attract investors
- Competition lead: Companies provide high dividends to maintain competition in their field.
- Maintaining investors: A high dividend can be a means of attracting investors and maintaining for long periods of time.