Best Dividend Paying Stocks in India

Investors desire high return on investment. This is the reason why majority focus on capital appreciation. When I ask people to buy stocks for dividend income, they look at me with amazement.

People like capital appreciation more then dividend yield.


Dividend yields of stocks are low compared to potential price appreciation. But remember, price appreciations are never certain. Comparatively, certainty of dividend income is far higher then price growth.

Why champion investors love best dividend paying stocks more? What makes top dividend paying stocks so likeable by champion investors?

High growth rate is a priority for majority, but expert investors likes to have a balance portfolio. Portfolio focusing only on capital appreciation is not good. Inclusion of dividend paying stocks balances their portfolio. Expert investors also loves passive income.

Dividend income is one of the best forms of passive income. People who believes in passive income also loves stocks that pay dividends. Passive income in form of dividend is like an assured income.


Whereas capital appreciation (potential high growth) is not as assured.

For passive income lovers, it is essential to track and buy the highest dividend paying stocks. Not all stocks that pays dividends are best.

Expert investors does not like high dividend paying stocks just for assured income. Potential of dividend income to grow year after year makes it even more likable.

In this article we will provide list of best dividend paying stocks for passive income lovers.

Dividend payment is a process by which companies share its net profit with its shareholders. When companies increases dividend payout, it is actually giving a hint that its profits are improving.

Companies which are able to grow its dividend-payout year after year are an indication of fundamentally strong company.

What about dividend paying stocks we have here :

* Introduction about dividend paying companies and why expert investors love accumulating them.
* What type of companies can afford to distribute high dividends consistently year after year.
* The benefits of investing in dividend paying stocks that makes is so popular with both short term and long term investors.
* How we can identify best dividend paying stocks from list of mediocre dividend paying companies.
* List of top dividend paying companies with its last five year average dividend yield & payout ratio.

These companies are more confident about its future cash flows. Hence they dare to distribute large amount of PAT as dividends.

My readers should note that, dividend yield at point of purchase may be low. But over a period of time, with growing net profits, dividend yield will also improves.

reliable company dividend stocks

Dividend stocks offer 2 clear benefits to investors. First, they generate short term income. This income is both consistent and also grows. Secondly, they also provide capital appreciation when held for long term. High inflation rate in India, makes other risk-free investments less lucrative.

As dividends are tax free, it clearly enjoys advantage over other risk-free options. The fact that dividend stocks can also provide capital appreciation makes them so special.

less volatile stocks dividend stocks

Dividend Paying Stocks are Stable

Dividend paying stocks are very stable. Historically, price of dividend paying stocks waver less than other stocks. They have lower beta. We may not feel this benefit when market is fair. But when stock market crashes, dividend stocks stands tall.

When everywhere there is a panicky, dividend stocks provides stability. People continue to hold on to dividend stocks even during market crash. The reason is simple, they continue to earn dividend even during market crash. Moreover, dividend stocks are those stocks, which recovers faster after crash. So, instead of selling, people buy dividend stocks during market crash.

risk free income dividend income

Dividend is like regular income

If equity can generate regular income, there cannot be a better investment. Equity is more famous for long term capital appreciation & risky. Short term reliability of equity is bare minimum. But dividend stock is a hybrid of equity and debt.

For a defensive invest like me, dividend stocks allows us to include equity in portfolio. Once investors get hold of a good dividend stocks, they never sell them. This gives dividend paying stocks its price stability.

accumulate dividend paying stocks

Accumulate more of Dividend stocks

There are more buyers of dividend paying stocks than sellers. But there is an exception during market crash. During market crash sellers dominate the market. During crash, market price of stocks falls. But this makes dividend stock holders even more happy. They buy more dividend stocks during every price-fall.

value dividend stocks

Dividend is a strong value indicator

Value investors considers high dividend yield as a strong value indicator. If a quality stock is yielding high dividend, it is considered as undervalued. Improving sales and profit figures are one of the strongest fundamental indicators of quality stocks. High profitability and low debt dependency is just like an icing on cake.

Companies which shares its profits consistently (dividends) are confident companies. This confidence comes with predictability of future earnings. Companies will never compromise its short term liquidity to please shareholders. So if a company is paying dividends it means that liquidity is in full control. Maintaining liquidity to pay its current liabilities is a top priority for any company. A company which is paying regular dividends must have sufficient liquidity to take care of its current liability.

stocks dividend paying

How to accumulate dividend paying stocks?

In India there are only few avenues to accumulate dividend. One of the well-known way is to buy stock that pays dividends. Another way is to buy dividend paying mutual funds. In Europe and America dividend paying exchange traded funds (ETF’s) are also available. At the moment India do not have such ETF’s. People can buy stocks using online trading account.

These days mutual funds can also be purchased using online trading platforms. If one does not have one then the easiest option is to call your bank. They will send investment agents who can arrange to buy dividend focused mutual funds for you.

high yield dividend stocks

High Dividend Yield is enough….?

Some might think that high dividend yielding stocks are good. But yield is not a sufficient indicator to identify good dividend paying stocks. Stocks paying high dividend one year and nothing the following year is also not good.

Consistent dividend payment is what is more interesting. If dividend paying stock are so good, why everyone do not only buy them? This is because not many know how to identify good dividend stocks. People just focus on high dividend yield, but this is insufficient. It may happen that a stock is yielding 8% dividend. But the following year the yield falls to as low as 0.5%. This is what happens for majority companies. For majority stocks dividend yield is not more than 1%. Investors target is to buy dividend stocks which has consistently paid dividends and their yield is also high.

weak fundamentals dividend stocks

Beware of Fluctuating dividends and weak fundamentals

Fluctuating dividend and weak fundamentals are main hurdles in identifying good dividend stocks. One year back Strides Arcolab was yielding dividend of 33% per annum. Today its yield is close to 55%.

But are such high yields sustainable? Look into profit and loss account of Strides Arcolab. Profit of company has been most wavering. Net profit for last 5 years was 55.99, 117.92, 73.56, 105.51 & 6.14 (Rs.Cr.). In last 5 years the profit of company has risen from Rs 6 crore to Rs 56 crore. But problem is high volatility of earning. To keep investors interested, such companies pay high dividends.

re invest dividends

Re-investment of Dividends is Key

Reinvesting dividend further increases the yield. People must invest systematically to accumulate dividend stocks. This way not only they accumulate fundamentally strong stocks but also increase dividend earning.

It is important to reinvest dividend that flows-in. This extra money buys more dividend stocks. This cycle continues. More stocks means more dividend, which again buys more stocks. It is said that Warren Buffett earns billion dollars alone in dividends. Let us set a personal target for ourselves. In next five years our dividend income shall be reach Rs 5,000/month. Let us start accumulating quality, dividend paying Indian stocks.

Best dividend paying stocks in India

(Updated as on May’2016)

DIVIDEND YIELD

SL Stocks Market Price (Rs.) Dividend Yield CY (%) Dividend Yield 5Y AVG. (%)
1 NHPC 21.2 29.27% 7.93%
2 NMDC 92.5 9.24% 6.89%
3 COAL IND. 285 7.26% 5.45%
4 POWER FIN 169.5 5.37% 4.29%
5 REC 167.25 6.40% 5.20%
6 SYNDICATE BANK 71.25 6.60% 6.97%
7 IDFC 47.75 5.45% 5.07%
8 CANARA BANK 193 5.90% 5.95%
9 HIND ZINC 167 2.63% 1.72%
10 IFCI 24.85 6.04% 4.43%
11 ONGC 208 4.57% 4.52%
12 TCS 2523.6 3.13% 1.36%
13 NALCO 43.05 4.07% 3.02%
14 BOI 89 5.61% 8.15%
15 CADILA HEALTH 333 3.60% 2.54%
16 NEYVELI LIGINITE 67.85 4.13% 3.98%
17 KARNATAKA BANK 115 4.35% 3.39%
18 UNION BANK 121 4.94% 5.60%
19 SAIL 42.4 4.72% 4.92%
20 OIL INDIA 326 6.14% 9.60%
21 PNB 82.6 4.10% 20.43%
22 INDIAN BANK 94 4.47% 6.31%
23 WIPRO 538 2.23% 1.45%
24 VEDANTA 101 4.06% 3.01%
25 HPCL 830 2.95% 1.71%

* 5Y – Duration of 5 Years
* CY – Current Year

DIVIDEND GROWTH RATE

SL Stocks Market Price (Rs.) Dividend Yield CY (%) DIVIDEND GROWTH RATE (5Y)
1 NHPC 21.2 29.27% 59.55%
2 NMDC 92.5 9.24% 20.97%
3 COAL IND. 285 7.26% 39.63%
4 POWER FIN 169.5 5.37% 11.74%
5 REC 167.25 6.40% 7.37%
6 SYNDICATE BANK 71.25 6.60% 4.90%
7 IDFC 47.75 5.45% 5.38%
8 CANARA BANK 193 5.90% 0.69%
9 HIND ZINC 167 2.63% 34.49%
10 IFCI 24.85 6.04% 8.45%
11 ONGC 208 4.57% 1.66%
12 TCS 2523.6 3.13% 41.35%
13 NALCO 43.05 4.07% 11.84%
14 BOI 89 5.61% -9.31%
15 CADILA HEALTH 333 3.60% 13.93%
16 NEYVELI LIGINITE 67.85 4.13% 4.01%
17 KARNATAKA BANK 115 4.35% 10.77%
18 UNION BANK 121 4.94% -5.60%
19 SAIL 42.4 4.72% -3.58%
20 OIL INDIA 326 6.14% -11.81%
21 PNB 82.6 4.10% -31.22%
22 INDIAN BANK 94 4.47% -10.53%
23 WIPRO 538 2.23% 14.88%
24 VEDANTA 101 4.06% 1.74%
25 HPCL 830 2.95% 11.84%

* 5Y – For duration of 5 Years
* CY – Current Year

LUMP SUM DIVIDEND PAID & DIVIDEND PAYOUT RATIO

SL Stocks Market Price (Rs.) NET PROFIT (5Y AVG.) AVG. Lump Dividend Paid (5Y) Dividend Payout Ratio AVG. (5Y)
1 NHPC 21.2 2077.984 666.71 32.35%
2 NMDC 92.5 6589.784 2525.522 38.74%
3 COAL IND. 285 10189.49 9802.998 88.16%
4 POWER FIN 169.5 4289.6 940.994 22.40%
5 REC 167.25 3829.63 858.1 23.31%
6 SYNDICATE BANK 71.25 1520.03 305.08 19.97%
7 IDFC 47.75 1606.338 368.496 22.93%
8 CANARA BANK 193 3064.302 519.79 17.57%
9 HIND ZINC 167 6481.726 1216.892 18.02%
10 IFCI 24.85 570.088 145.856 27.79%
11 ONGC 208 20960.076 8042.164 38.84%
12 TCS 2523.6 13812.838 6736.044 45.75%
13 NALCO 43.05 895.166 335.04 40.62%
14 BOI 89 2470.754 432.11 17.63%
15 CADILA HEALTH 333 788.24 173.04 22.97%
16 NEYVELI LIGINITE 67.85 1450.234 452.982 31.24%
17 KARNATAKA BANK 115 312.248 73.476 24.23%
18 UNION BANK 121 1900.972 394.188 20.64%
19 SAIL 42.4 3093.228 860.79 30.41%
20 OIL INDIA 326 3083.098 1268.398 41.17%
21 PNB 82.6 4093.906 677.522 16.49%
22 INDIAN BANK 94 1441.26 267.598 18.64%
23 WIPRO 538 6151.9 1921.94 31.06%
24 VEDANTA 101 1647.36 572.484 38.01%
25 HPCL 830 1564.436 480.85 30.97%

* 5Y – For duration of 5 Years
* CY – Current Year





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25 Comments on "Best Dividend Paying Stocks in India"

  1. R L Mishra | May 2, 2016 at 5:29 pm | Reply

    Good information. Thanks. You rightly pointed out, I wan keen to watch dividend yield rather divident /diveidend growth every year. is very usefull for me.

  2. Great job

  3. Subrata Chatterjee | April 18, 2016 at 2:30 pm | Reply

    Very well explained and informative too.

  4. kamlesh gupta | April 9, 2016 at 12:03 pm | Reply

    Thanks well explained

  5. Very useful ideas for long term investors
    Thanks

  6. Just to add to the excellent information, I give herewith the steps to get the list of top dividend yeild stocks. Go to Google, Type: “top dividend yield stocks in India”, select the link of moneycontrol.com and voila, you get the latest top dividend yield stocks along with their 5y consistency history!!!!

    http://www.moneycontrol.com/stocks/marketstats/nsetopdiv/index.html

  7. great site….. excelllent valuable information

  8. v.v.good. Iam a long term investor in the financial market for the last 10 years and your site is very educative in a nut shell and very useful with valuable information ..Thank you and expecting more from you

  9. In the above mentioned lists upto Nov. 2015, you have mentioned IDFC twice at numbers 8 and 10 and that too with completely different figures. It absolutely arouse suspicion about the authenticity and correctness of the tabulated data you provided.

  10. very useful. thanks

  11. Very useful information. Request u to update information for Nov, 2015. Thanks

  12. Hi,
    This is exactly what a new commer to this field like me was looking for.
    The information, and the way it is presented is great. I am the 678th subscriber and looking forward to good investments through good information.

  13. Nitesh Thadani | September 9, 2015 at 6:15 am | Reply

    I am new to the stock market can u please advice how dividend is calculated is it on percentage or it is on book value .Can u please guide me how dividend is calculated

  14. very useful information you had post this is my first time visit to site

  15. Wonderfսl work! Thiѕ iis thе type of information that should be shɑred around thee net.
    Shame оn Google for not positioning this put up higher!
    Come on over and visit my web site . Thank you =)

  16. Nice article….consistent dividend means consistent profits

  17. Please check the dividend yields again. I track some of these stocks and the yields are not correct. Asian Paints 4.95%. This is a high PE stock and always traded at 1-1.5% yield for past 3-4 years. Axis Bank 4.53%. Axis bank always traded at 1-1.5% yield for past 3-4 years. 4.53% yield is impossible for a private bank stock. If these two are incorrect I suspect others might not be right as well. Please check again. Thanks.

  18. thank for this list i am waiting for this list but i can not find it ! Now i am very happy thank you ! , i lost to much in market so now i will go for this.

  19. Thanks for sharing this information here. It becomes always profitable if you pick best dividend paying stock in India. As you can get high return in this way. In.dividendinvestor.com is free online portal that I use mostly to track dividend data and high dividend paying stocks in India.

  20. Thanks. I have been looking for this list for a long time!!

  21. quite informative,thanks

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