Investing in stocks can be a scary thought if you are new to it or don’t know where to start. That’s why many people often opt to stick with safer, less volatile investments like fixed deposits and mutual funds.
But what about those who want to take on the challenge of investing in stocks and other types of securities? To help you out, here are five of the highest dividend-paying stocks in India that are predicted to have the best performance by 2022.
If you are interested in more investment tips, check out your local broker or financial advisor.
Top 5 Reasons To Buy These High-Yield Stocks
● The Sensex-30 Index has been the benchmark index of the Indian stock market since 1985 and is the most widely used index to represent the Indian economy.
● The dividend yield for this index is at 3.38%.
● It includes some of the largest companies in India such as HDFC Bank Ltd., Tata Motors Ltd., and Hindustan Unilever Ltd., which are all well-established and stable investments with good dividends for long-term investors.
● The stocks that made up the top five holdings in the Sensex-30 index are HDFC Bank Ltd. (8%), State Bank of India (7%), ICICI Bank Ltd.(6%), Reliance Industries Limited (5%) and TATA Motors Limited (5%).
● The stocks that made up the top five holdings in the Nifty 50 index are HDFC Bank Ltd. (8%), and ICICI Bank Ltd.
These are also high-yielding stocks and make excellent investment choices.
Reliance Industries Limited
With revenues of over Rs5.5 trillion, Reliance Industries Limited is one of the largest and most profitable corporations in the world.
Today, it operates across diverse sectors such as refining, petrochemicals, textiles, natural gas, oil and gas exploration and production, retail, and telecommunications.
The company also has some of the most efficient plants for refining petroleum products in the world.
It is highly profitable, with an ROE (return on equity) of about 40%. Meanwhile, its dividend yield stands at 6.1%.
Power Grid Corporation of India Limited
After 5 years of an unstable Indian economy, Power Grid Corporation of India Limited is seeing the beginnings of an economic revival.
With its dual-investment model and high dividend yield, the stock offers stability to investors looking to diversify their portfolios.
Its power transmission and distribution infrastructure will not only help reduce poverty levels but also bring electricity to rural areas that currently have no access.
These factors combined with the 10% dividend yield make it one of the most lucrative stocks on the BSE today.
Indian Oil Corporation Limited (IOCL)
The Indian Oil Corporation Limited is the largest company that deals with the exploration and production of crude oil and natural gas.
The company has an annual turnover of Rs. 2,14,500 crores and an estimated market capitalization of Rs. 1,84,000 crores.
This is one of the best companies to invest in if you want a dividend-paying stock with stability and growth potential.
IOCL recently acquired Hindustan Petroleum Corporation (HPCL) in a deal worth $6.3 billion which will help them create a monopoly in the refining industry and also make them more profitable.
Their gross refining margin for FY2018 was $7 per barrel which is excellent for both profitability and investor satisfaction.
This is definitely not your average investment but it does pay off well for those who can afford to put their money into it.
Hindustan Petroleum Corporation Limited
HPCL’s primary products are petroleum products like gasoline, diesel fuel, and kerosene. The company also produces natural gas, petrochemicals, bitumen, and coal bed methane.
It is one of the six integrated oil companies in India with all the facilities to manufacture petrol and gas, produce lubricants and provide energy to various industries. It has been able to maintain its dividend payments at around 8% over the last decade or so.
Earnings per share have grown steadily from 27.1 in FY 2007 to Rs 41.8 crore as on March 31, 2017. Besides this impressive long-term growth rate, HPCL has also managed to grow dividends paid per share by almost 13%.
There was a payout ratio of 64% for FY 2016 and this seems sustainable due to the company’s cash flow generation capability as well as healthy reserves position (Rs 1147 crore).
Moreover, the share price is currently trading near its 52-week low, providing investors with an excellent entry point for investing.
Moreover, HPCL has never fallen below investment grade by credit rating agencies such as Standard & Poor’s and Moody’s Investors Service. With a low debt burden and healthy financial metrics, Hindustan Petroleum Corporation Limited presents itself as an attractive investment option in the Indian stock market.
Mahanagar Gas Limited
Mahanagar Gas Limited is one of the highest dividend-paying stocks in India as it is based in the public sector.
The company has equity shares listed at the National Stock Exchange of India Ltd. and the Bombay Stock Exchange. It is engaged in the business of supplying liquefied petroleum gas (LPG) to various sectors such as industrial, domestic, commercial, and transport.
The company is headquartered in Mumbai, Maharashtra, with offices located throughout the country. They have an annual turnover of Rs.30 billion with profit before tax amounting to Rs.1.5 billion during FY18-19. In the last year, they have paid an average dividend yield of 5%.
Their return on capital employed was 9.7% and their return on equity was 20% during FY 18-19. Apart from the high dividend yields, their growth rate is also very attractive which leads to a sustainable future for long-term investment in this company.
With a growing population and increasing consumerism among Indians, investors will be looking to make the most out of it.
The company’s diversified customer base provides them with some stability against market fluctuations too. If you are looking for reliable dividends while investing in India, then Mahanagar Gas is your best bet.
Conclusion
It is only natural to have some trepidation about investing your hard-earned money. However, if you invest wisely and plan for the future with dividend-paying stocks, you can reap significant benefits without taking too much risk.
Plus, it will help you sleep better at night knowing that your money is working hard for you.