Article

5 High-Dividend yielding stocks that you should know

22 Aug 2017 Nikita Bhoota

Generally, investors in India avoid taking risk while investing. They look for investment instruments which offer consistent returns and are less volatile. However, one may prefer investing in high dividend yielding stocks which give stable income vs. high value/expensive stocks that involve more risk. Before discussing high-dividend yielding stocks, let us understand what exactly is the dividend yield?

Dividend yield is the annual return which the stock pays in the form of dividends. Dividend yield is calculated by dividing the dividend per share by current market price. High dividend yield could be a result of either fall in the stock price or payment of higher dividend. Therefore, one should also consider the fundamentals of the company while selecting high dividend yielding stocks.

Below-mentioned are some of the high-dividend yielding stocks.

Stock

Dividend Yield (%) 2017

3 Years Average Dividend Yield (%)

Coal India Ltd.

8.1

9.2

Hindustan Petroleum Corporation Ltd.

6.1

6.0

Oil India Ltd.

5.4

6.3

Oil & Natural Gas Corporation Ltd.

4.8

5.4

Indiabulls Housing Finance Ltd.

3.4

3.3

Source: Ace Equity

Coal India (CIL)

CIL is the largest coal producer in the world and controls 80% of the Indian coal market. Its product portfolio largely consists of thermal coal - 97% while the rest is cooking coal. The company is debt free and has net cash of ~ Rs 29,000 cr (FY17) in its books. The company has a mature business and may not require major capex going forward, which will help it maintain healthy cash flows. The average dividend yield for the past 3 years is 9.2%, while it was 8.1% in FY17.

Hindustan Petroleum Corporation Ltd (HPCL)

HPCL is a leading oil and gas refining and marketing company in India with a market share of 21.44% as on FY17. It operates two major refineries producing petroleum fuels with a capacity of 7.5 MMTPA (Mumbai) and 8.3 MMTPA (Visakhapatnam). The company has consistently maintained its average dividend payout ratio in the range of 30% in the past 5 years and is expected to improve further on account of government push on PSU’s to double their dividend payout ratio. Government holds 51% stake in HPCL. The company’s average dividend yield stood at 6% for the past 3 years.

Oil India Ltd

Oil India is the second largest oil and gas exploration and production companies in India. The company has healthy debt to equity ratio of 0.5x (FY17) and average dividend payout ratio of 47% in the past 5 years. However, the company has shown poor financial performance historically. Therefore, in order to maintain its ROE and reward the shareholders, we expect the company to maintain its dividend yield in the future. The average dividend yield for the past 3 years stood at 6.3%.

Indiabulls Housing Finance Ltd (IHFL)

IHFL has transformed from a diversified lender to a focused mortgage player. Its outstanding loans stood at ~Rs 81,422 cr as of FY17. Loan book mix was ~79% mortgage loans and ~21% corporate financing. GNPA & NNPA presently stands healthy at ~0.85% and ~0.36% respectively. IHFL’s PAT has tripled to Rs 2,900 cr in FY17 in the past five years. We believe that strong profitability growth and adequate capital will help the company to maintain its average dividend payout ratio of ~65% in the past 3 years. The average dividend yield for the past 3 years was 3.3%.

Oil & Natural Gas Corporation Ltd (ONGC)

ONGC is the largest oil and gas exploration and production company in India. It accounts for ~70% of India’s oil and gas production. ONGC has maintained dividend payout ratio of more than ~40% in the past 5 years and has reached to 51% in the FY17. We expect the company to maintain a higher dividend payout ratio given its strong growth prospects with the commencement of new fields and efforts for redevelopment in existing fields. The average dividend yield for the past 3 years was 5.4%.

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5 High-Dividend yielding stocks that you should know

22 Aug 2017 Nikita Bhoota

Generally, investors in India avoid taking risk while investing. They look for investment instruments which offer consistent returns and are less volatile. However, one may prefer investing in high dividend yielding stocks which give stable income vs. high value/expensive stocks that involve more risk. Before discussing high-dividend yielding stocks, let us understand what exactly is the dividend yield?

Dividend yield is the annual return which the stock pays in the form of dividends. Dividend yield is calculated by dividing the dividend per share by current market price. High dividend yield could be a result of either fall in the stock price or payment of higher dividend. Therefore, one should also consider the fundamentals of the company while selecting high dividend yielding stocks.

Below-mentioned are some of the high-dividend yielding stocks.

Stock

Dividend Yield (%) 2017

3 Years Average Dividend Yield (%)

Coal India Ltd.

8.1

9.2

Hindustan Petroleum Corporation Ltd.

6.1

6.0

Oil India Ltd.

5.4

6.3

Oil & Natural Gas Corporation Ltd.

4.8

5.4

Indiabulls Housing Finance Ltd.

3.4

3.3

Source: Ace Equity

Coal India (CIL)

CIL is the largest coal producer in the world and controls 80% of the Indian coal market. Its product portfolio largely consists of thermal coal - 97% while the rest is cooking coal. The company is debt free and has net cash of ~ Rs 29,000 cr (FY17) in its books. The company has a mature business and may not require major capex going forward, which will help it maintain healthy cash flows. The average dividend yield for the past 3 years is 9.2%, while it was 8.1% in FY17.

Hindustan Petroleum Corporation Ltd (HPCL)

HPCL is a leading oil and gas refining and marketing company in India with a market share of 21.44% as on FY17. It operates two major refineries producing petroleum fuels with a capacity of 7.5 MMTPA (Mumbai) and 8.3 MMTPA (Visakhapatnam). The company has consistently maintained its average dividend payout ratio in the range of 30% in the past 5 years and is expected to improve further on account of government push on PSU’s to double their dividend payout ratio. Government holds 51% stake in HPCL. The company’s average dividend yield stood at 6% for the past 3 years.

Oil India Ltd

Oil India is the second largest oil and gas exploration and production companies in India. The company has healthy debt to equity ratio of 0.5x (FY17) and average dividend payout ratio of 47% in the past 5 years. However, the company has shown poor financial performance historically. Therefore, in order to maintain its ROE and reward the shareholders, we expect the company to maintain its dividend yield in the future. The average dividend yield for the past 3 years stood at 6.3%.

Indiabulls Housing Finance Ltd (IHFL)

IHFL has transformed from a diversified lender to a focused mortgage player. Its outstanding loans stood at ~Rs 81,422 cr as of FY17. Loan book mix was ~79% mortgage loans and ~21% corporate financing. GNPA & NNPA presently stands healthy at ~0.85% and ~0.36% respectively. IHFL’s PAT has tripled to Rs 2,900 cr in FY17 in the past five years. We believe that strong profitability growth and adequate capital will help the company to maintain its average dividend payout ratio of ~65% in the past 3 years. The average dividend yield for the past 3 years was 3.3%.

Oil & Natural Gas Corporation Ltd (ONGC)

ONGC is the largest oil and gas exploration and production company in India. It accounts for ~70% of India’s oil and gas production. ONGC has maintained dividend payout ratio of more than ~40% in the past 5 years and has reached to 51% in the FY17. We expect the company to maintain a higher dividend payout ratio given its strong growth prospects with the commencement of new fields and efforts for redevelopment in existing fields. The average dividend yield for the past 3 years was 5.4%.