Best Monthly Dividend-Paying Stocks in India

Monthly dividend stocks give you money every month, unlike most companies that pay only four times yearly. When you invest in these stocks, you get a slice of the company's profits regularly without waiting. 

This frequent income helps retirees pay bills and others looking for a steady cash flow. Monthly dividend-paying stocks offer both regular income and the chance to grow your money as the company grows.

Please note that stocks that pay monthly dividends are quite rare in India, and most dividend stocks pay dividends every quarter. The table below lists India's top 10 dividend stocks ranked by dividend yield percentage, showing consistent performers across various sectors.

Vedanta

Vedanta is one of India's biggest mining companies. It digs up metals like zinc, copper, and aluminium and also makes oil and gas. The company gives good money back to people who own its shares. 

Vedanta is known as one of the best dividend-paying stocks in India because it shares a lot of its profits with shareholders regularly, making it a favourite for people looking to earn extra income.

TCS (Tata Consultancy Services)

TCS is one of India's biggest technology companies that helps other businesses with computer services. Founded in 1968, it belongs to the famous Tata Group. TCS builds software, manages IT systems and gives business advice to companies around the world. 

Many investors put TCS in their monthly dividend stocks list because it shares profits with shareholders regularly. The company also shows potential for future growth as more businesses need digital services.

Powergrid Infrastructure Investment Trust

Powergrid Infrastructure Investment Trust (PGInvIT) owns 85% electricity transmission lines across India. They make money by charging fees when power companies use their lines to send electricity. 

They give back most of their earnings to investors every three months. This makes them popular in dividend stocks lists. Their business is steady because everyone needs electricity, so they can keep paying dividends even when the economy isn't doing well.

Coal India

Coal India is the biggest coal mining company not just in India but in the whole world! Started in 1975, it digs up coal that power plants use to make electricity for our homes and factories. The government of India owns most of the company. With mines across many states, Coal India employs thousands of workers who extract this important fuel. 

Hindustan Zinc Ltd.

Hindustan Zinc is India's largest zinc producer and mines zinc in Rajasthan. Zinc is a metal used to protect steel from rusting and is used to make batteries. The company makes good profits and shares them with investors through dividends. 

Hindustan Zinc is included in the best dividend stocks rankings because it has consistently paid dividends for many years. The company is partly owned by the Indian government and partly by Vedanta.

IndiGrid Infrastructure Trust

IndiGrid Infrastructure Trust owns 46 power transmission lines and 13 substations across India. It collects rent from power companies that use its equipment. What makes IndiGrid special is that it's one of the few stocks with monthly dividend payments in India. 

This regular income makes it popular with retirees and others who need frequent cash flow. Its business is stable because electricity demand stays constant throughout the year.

Oil and Natural Gas Corporation

Oil and Natural Gas Corporation (ONGC) is India's biggest oil company, owned mostly by the government. It finds and produces oil and natural gas from land and sea, and is important for India's energy needs.

ONGC appears on many best dividend-paying stocks lists because it shares a good portion of its profits with shareholders. The company's dividend depends on oil prices—when oil prices are high, it typically pays more. 

Accelya Solutions

Accelya Solutions is a special company that helps airlines with behind-the-scenes work. They handle things like ticket pricing, managing costs and processing payments for many airlines worldwide. 

Their software helps airlines run smoother operations and make better decisions about ticket prices. The company's specialised knowledge of the airline industry makes it valuable to investors looking for stable stocks that pay monthly dividends in a specific business area.

Castrol India

Castrol India makes oils and lubricants that keep car and bike engines running smoothly. Part of the global BP group, it has been in India for over 100 years. Its famous products, like Castrol GTX and Activ, are used in millions of vehicles across the country. 
For investors building a monthly dividend stocks list, Castrol India is interesting because the vehicle population keeps growing, creating ongoing demand.

Jagran Prakashan Ltd.

Jagran Prakashan publishes Dainik Jagran, one of India's most-read Hindi newspapers. It also owns radio stations and websites. The company makes money from selling newspapers and advertising. 

Jagran shows up in dividend stocks lists because it regularly shares profits with investors. While newer media companies focus on growth, Jagran maintains a tradition of paying dividends. Their established brand helps them stay profitable in the changing media world.

What Are Monthly Dividend-Paying Stocks?

Stocks that pay monthly dividends are shares of companies that give money back to their owners every month. When you buy a share, you become a part-owner of that company. Most companies only share their profits four times a year or even just once a year. 

But monthly dividend stocks share money twelve times a year - once every month! This is great for people who need regular money coming in. The companies that offer monthly payments are often real estate companies, loan businesses or companies that provide basic needs like electricity. 

These stocks are perfect for people who often want to receive money without selling their investment.

Dividend Yield vs Dividend Ratio – Key Differences

Dividend Yield:

• Shows how much money you get compared to the stock price
• Calculated as the yearly dividend divided by the current stock price
• Changes when stock prices go up or down
• Higher numbers often mean better value for high-dividend stocks

Dividend Payout Ratio:

• Shows what part of the company's profits goes to shareholders
• Calculated as total dividends divided by total earnings
• Tells you if the company can keep paying dividends
• Lower numbers mean the company keeps more money for growth

Features of the Monthly Dividend Paying Stocks

• Consistent Cash Flow: Dividend stocks every month give you money 12 times a year instead of waiting for quarterly payments. This helps you plan your expenses better and have money coming in regularly, like a salary.
• Lower Volatility: The best dividend-paying stocks usually don't change price as much as other stocks. Companies that pay dividends monthly are often stable businesses that make good money even when the economy is not doing well.
• Dividend Reinvestment: You can use your monthly dividends to buy more shares of the stock. This helps you grow your investment faster because your new shares will also start giving you dividends.
• Portfolio Stability: Adding monthly dividend stocks to your collection of investments makes your overall money safer. They act like a cushion when other parts of your investment may be losing value.
• High Yield Potential: Some stocks offer higher returns compared to bank deposits or government bonds. This makes them attractive for people looking to earn more from their savings.

Which Sectors Offer the Highest Dividend-Paying Indian Stocks?

Looking for good monthly dividend stocks in India? Some sectors give better dividends than others. Here's where you can find the best dividend-paying stocks in India:

• Financial Sector - Banks and REITs (Real Estate Investment Trusts) often give good monthly dividends. Big banks keep their payments steady even when business changes.
• Utility Sector - Companies that provide electricity, gas and water usually pay dividends regularly. They have a steady income because people always need these services.
• Oil and Gas Sector - Companies like IOC (Indian Oil Corporation) give reliable dividends because they have steady demand for their products.
• Public Sector Undertakings (PSUs) - Government companies like Coal India and NHPC Limited often have rules requiring them to share profits with investors.
• Consumer Goods - Companies that make everyday items people always buy can afford to give regular dividends. Their business stays strong in good and bad times.

Remember to check if a company has been paying dividends regularly before you invest your money in it!

Factors to Consider Before Investing in Monthly Dividend-Paying Stocks

• Financial Health: Check if the company makes enough money regularly. Look at their profits for the last few years. Companies with stable earnings can keep paying dividends even when business slows down.
• Dividend History: See if the company has paid dividends regularly for at least 5 years. Good monthly dividend-paying stocks don't skip payments or suddenly cut their dividends.
• Dividend Yield: This shows how much dividend you get compared to the stock price. If a ₹100 stock pays a ₹5 yearly dividend, the yield is 5%. Higher isn't always better—very high yields might be a warning sign.
• Payout Ratio: This shows you what part of the profits goes to dividends. If a company pays out 90% of its profits, it might struggle during tough times. A ratio between 40% and 60% is usually safer.
• Business Strength: Choose companies that sell products people need all the time, like electricity or daily household items. These businesses can continue to pay dividends even during economic issues.
• Future Growth: Pick companies that can grow their business over time. Growing companies can increase their dividends year after year, giving you more income as time passes.

How to Invest in Dividend Stocks?

Ready to start investing in the best dividend-paying stocks? Here's what you need to do:

1. First, you need to open a demat and trading account. Without this, you cannot invest in any stocks in India. 
2. Next, do some basic research about companies that regularly pay dividends. You don't need to be an expert—just look for companies that have paid dividends for many years.

With 5paisa, you'll enjoy some of the lowest brokerage fees in India, which means more dividend money stays in your pocket! Our fees start at just ₹20 per order, helping you maximise your investment returns.

Our user-friendly mobile app lets you track all your dividend payments and manage investments anytime, anywhere. You can set alerts for upcoming dividend announcements and automatically reinvest your earnings.

Benefits of Monthly Dividend-Paying Stocks

Steady Income Flow
Monthly dividend-paying stocks provide money every month instead of quarterly or yearly. This regular income works like a salary, giving you cash you can count on throughout the year. You don't have to wait for months between payments.

Income & Portfolio Diversification
Adding dividend stocks to your investments spreads out your risk. When you own different types of investments, you protect yourself if one area performs poorly. The benefits of dividend stocks include creating multiple income sources beyond just your job.

Faster Compounding
Monthly dividends let your money grow faster when you reinvest them. Since you get payments more often than quarterly dividends, your reinvested money starts working for you sooner. This helps your investment grow more quickly over time.

Budgeting
Regular monthly payments make planning your finances easier. You can match these payments to your monthly expenses, like rent or bills. This predictable income helps you make better financial plans and reduces stress about money.

How Market Trends Affect Monthly Dividend-Paying Stocks

Stock market movements play a huge role in how dividend-paying companies perform. Think of these companies like businesses you might own that pay you regular money every month. 

When banks start offering higher interest rates on savings accounts, many people decide to move their money away from stocks. They ask themselves, "Why should I risk losing money in stocks when I can earn almost the same amount safely in a bank?"

Economic situations create different challenges for these companies. During tough times, businesses make less profit, which means they have less money to share with their shareholders. Many companies end up cutting the monthly payments they give to investors or they might stop paying altogether. This really hurts people who count on receiving that money each month to help with their expenses.

Rising prices across the economy also affect dividend stocks. When everything becomes more expensive, companies' monthly payments buy less than they used to. Smart companies try to increase their payments during these times, making them more valuable to investors who want to keep up with rising costs.

Risks Associated with Monthly Dividend Stocks

While dividend investing offers many advantages, stocks that pay monthly dividends come with specific risks that every investor should understand.

• Overreliance and Dividend Cuts: Many investors become too dependent on monthly dividend payments for their income, which creates problems when companies face financial trouble. When businesses struggle with cash flow or declining profits, they often cut or stop dividend payments entirely.
• Sector-Specific Risks: Dividend stocks often cluster in specific sectors, such as real estate investment trusts (REITs), utilities and certain financial companies. This concentration means your portfolio becomes vulnerable when entire sectors face challenges.
• Interest Rate Sensitivity: Stocks that pay monthly dividends react strongly to changes in interest rates because investors compare dividend yields to bond yields. When interest rates rise, these dividend stocks often lose value as investors move money to safer bonds that now offer better returns.
• Limited Capital Growth: Companies that focus on paying high monthly dividends often use most of their profits for these payments instead of reinvesting in business growth. This strategy can limit the company's ability to expand, innovate or increase its stock price over time, potentially reducing your overall investment returns.

How are Dividends Taxed in India?

The taxation of dividends in India changed completely in April 2020 when the government moved the tax responsibility from companies to individual investors. 

Before this change, companies paid a special dividend tax before giving dividends to shareholders, so investors received tax-free dividends. Now, all dividend income goes directly into your total income and gets taxed according to your income tax slab rates.

When you receive dividends worth more than Rs 10,000 from any company in a year, they automatically cut 10% as advance tax before paying you. This deducted amount can be adjusted against your final tax bill when you file your income tax return. 

You must declare all dividend income while filing taxes, whether from Indian companies or foreign companies. The government made this change to make the tax system more transparent and fair for all investors in the country.

Conclusion

Companies that pay dividends monthly give you funds every month instead of making you wait for months. These stocks help you get regular income like a salary. They work well for people who need money often, like retirees. 

Before buying, check if the company makes good profits and has paid dividends for many years. Remember to spread your money across different types of stocks to stay safe. Moreover, monthly dividend stocks are a smart way to earn money while you sleep!