Best Monthly Dividend-Paying Stocks in India

Kevin O'Leary, the Canadian businessman known for his striking questions on Shark Tank, once said, ‘I do not own a single security anywhere that doesn't pay a dividend, and I formed a mutual-fund company with that very simple philosophy.’ A dividend is a share of the profit paid to its shareholders for their investment in a company’s equity. If this strategy speaks to you, then this comprehensive guide to the best monthly dividend stocks in India is sure to assist you. Scroll down to learn more. 

What are High Dividend Paying Stocks?

Dividend yield measures the dividend income generated by a stock relative to its share price. It is calculated by dividing the annual dividend per share by the current market price per share, then multiplying by 100. When selecting top dividend stocks in India, investors seek those paying higher than average market yields. 

The ideal picks offer stock price appreciation over time and consistent dividend payouts that grow steadily. By choosing stocks with reliable dividends and payout growth, investors can generate regular income for needs like retirement while still benefiting from long-term capital gains. The combination makes high-yielders attractive for income-oriented portfolios.

10 Highest Monthly Dividend-Paying Stocks in India

Factors To Consider Before Investing In Monthly Dividend Paying Stocks 

Earning a passive income or even a steady stream of income using dividends seems attractive. However, there are certain factors that need to be considered. Listed below are the factors that you, as an investor, should consider before investing in monthly dividend stocks: 

❖    Financial Health of the company: Before investing in the dividend stocks of a company, it is crucial to check the current financial condition of the company. You should review the financial statements and make sure that the company has a stable and consistent flow of cash. 

❖    Dividend stability: Checking the stability of the dividend is an important aspect that should be taken into consideration before making an investment. You should review the company's dividend history to determine if it has a consistent track record of paying dividends, increasing them over time, or if the dividend has been volatile.

❖    Dividend Yield: The percent of the share price that is paid in dividends every year is known as the dividend yield. You should compare the dividend yield of the company you are considering with other similar companies in the industry to determine if it is competitive.

❖    Industry Trends: One of the most important factors to consider before investing in monthly dividend-paying stocks in India is keeping track of industry trends. You should review and be familiar with the up-and-coming trends in the market and interpret how you can use them for your benefit. 

❖    Growth prospects: Investors should do thorough research before making a decision to invest in monthly dividend-paying stocks in India. This research must entail the growth prospects that come along with the dividend stocks. If the company has strong growth prospects, it may be able to increase its dividend payments over time.

Performance Overview of Monthly Dividend Paying Stocks List 
 

Dr Lal Path Labs

This healthcare giant provides diagnostic and test services to its customers. All across the country, there are various laboratories that carry out investigations for different branches. This healthcare company has a dividend yield of 0.65% and a market capitalization of ₹15,443.85. This stock gave a 3-year return of 16.58%. The annual growth rate of the company is estimated at 31.08%. 

Union Bank of India

This India-based banking company offers a plethora of financial services to its customers. This bank is amongst the most popular financial institutions in the country, with a market capitalization of ₹47330.63Cr. As of last year, the dividend percentage of the bank gave ₹1.9 for the entire year. Furthermore, in June 2022, the bank showcased a dividend yield of 2.87%.  

Britannia Industries 

Britannia Industries carries out the selling and manufacturing of different food products. The company has a market capitalization of ₹103639.61 cr. and as of June 2022, the dividend yield of the company was estimated at 1.61%. 

Polycab India

Under the POLYCAB brand, Polycab India Limited manufactures and sells wires and cables fast-moving electrical goods (FMEG).  Being of the most popular technology companies, Polycab India has a market capitalization of ₹43401.23 Cr. and the share price amounts upto ₹2883.6 as of March 15 2023. The dividend yield of the company was estimated at 0.83% in June 2022. Furthermore, the revenue of the company as of December 2022. Was ₹2754.86 Cr. 

Punjab National Bank

This Indian-based bank offers its customers numerous banking services pertaining to retail banking, corporate banking, and NRI services, among others. The market capitalization of this bank is estimated at ₹53051.07Cr as of March 15, 2023. The share price was ₹48.15. Punjab National Bank declared an effective dividend yield of 1.33% for the quarter ending June 2022. For the quarter ending December 2022, Punjab National Bank generated $1,613.33 crore in revenue. The revenue grew by 17.32% year on year basis since the last quarter. 

Supreme Industries

Offering a wide range of plastic products in India, the company operates 25 manufacturing facilities across the country. The market capitalization of the company is estimated at ₹33855.84Cr, and the share price is valued at ₹2535.15 as of March 15, 2023. The dividend declaration by Supreme Industries Ltd for the quarter ending December 2022 translates into a dividend yield of 0.95 percent. For the quarter ending December 2022, supreme industries Ltd generated revenue of Rs 2446.58 crore. According to the report, revenue has grown by 17.41% from the last quarter to this.

Happiest Minds Technologies

Located in India, Happiest Minds Technologies Limited offers digital transformation consulting and IT development services. This company’s market capitalization is estimated at ₹12206.56Cr, and the share price is ₹827.35 as of March 15, 2023. 
A dividend yield of 0.69% is expected to be declared by Happiest Minds Technologies Ltd for the quarter ending December 2022. For the quarter ending December 2022, Happiest Minds Technologies Ltd's revenue was $374.68Cr. Since the last quarter, revenue has increased by 28.19% year-over-year. 

Balkrishna Industries

An Indian company named Balkrishna Industries Limited deals in pneumatic tires. There are a variety of tires, tubes, and tire flips available from the company. The market capitalization of the company is estimated at ₹38181.11Cr, and the share price is valued at ₹1963.65 as of 15 March 2023. This dividend yield represents 1.63% of Balkrishna Industries Ltd's dividend declared for the quarter ending March 2023. In the quarter ending December 2022, Balkrishna Industries Ltd generated revenue of Rs. 2210.54 Crore. Since the last quarter, revenue has increased by 2.39% year-over-year. 

Dalmia Bharat

Among its primary missions is the manufacturing and sale of cement, refractory products, and related products. The company’s market capitalization is valued at ₹32624.4Cr, and the share price is  ₹1750.3. Furthermore, the dividend was valued at ₹4, resulting in a dividend yield of 0.51%. 

Indian Hotels Company

In addition to short-term accommodations, Indian Hotels Company operates restaurants and mobile food services. Being one of the most popular in its field, the Indian Hotels Company has a market capitalization of ₹44344.9Cr with ₹315.65 as the share price. Furthermore, the dividend was valued at ₹0.4, resulting in a dividend yield of 0.25%. In the quarter ending December 2022, Indian Hotels Co Ltd generated revenues of 1743.61 crores. The revenue is estimated to grow on a year-to-year basis since the last quarter by 53.77%. 

How to Invest in the Highest Dividend Paying Stocks?

Below are the steps to invest in the highest dividend-paying stocks:

● Research companies with a long history of steady or increasing dividend payments each year to identify dependable high-yielders.

● Check the dividend yield by dividing the annual dividend by the share price and focus on stocks yielding higher than benchmark averages.

● Analyse financial health through metrics like earnings growth, low debt ratios and strong cash flows to pick companies that can sustain dividends.

● Understand the business model and industry outlook to determine reliable players with enduring competitive advantage in growth sectors.

● Review valuation ratios like P/E ratios to complement high yields with potential share price upside over the long run.

● Build a diversified portfolio that is not concentrated in just a few stocks or sectors to balance risks.

● Reinvest dividend payments to compound returns and expand the income stream over time.

Advantages of the Highest Dividend Paying Indian Stocks

High dividend stocks can be an attractive investment option due to their potential for stable income and additional benefits. Here are some key reasons why they can be a good choice:

Higher Total Returns: These stocks provide both dividend income and capital appreciation, often outperforming low or no-dividend stocks in the long term.

Lower Risk: High dividend stocks are usually from well-established, financially stable companies, offering less volatility than other stocks.

Inflation Protection: Dividends can grow over time, helping to protect against inflation compared to fixed-income investments.

Tax Advantages: Dividends may be taxed lower than other investment incomes, providing potential tax benefits.

Suitability: Always consider your investment goals and risk appetite before investing in high dividend-paying stocks.

Risks Associated with High Dividend Stocks

Investing in high-dividend stocks can provide regular income but also carries some risks.

1. Unsustainable Payout Ratios
If a company pays out too high a proportion of its earnings as dividends, it may be unable to sustain those dividend levels over time. Analysing a stock's dividend payout ratio can reveal if dividends are too generous given the company's profit levels.

2. Industry Disruptions
High dividend payers are often mature companies in industries vulnerable to innovation and competition. Disruptive trends can hurt a stock's profits and threaten its dividend coverage. Investors should assess risks before assuming dividends are safe.

3. Rising Interest Rates
When interest rates climb, income investors may shift towards lower-risk fixed-income securities and away from traditionally higher-yielding stocks. This rotation can exert downward price pressure on popular dividend names.

4. Overvaluation
Stocks with high dividend yields tend to attract investor demand. However, this can inflate share prices beyond fundamental value, increasing the risk of overpaying for dividend income.
 

Conclusion

Monthly dividend-paying stocks can be an excellent addition to an investment portfolio, especially for those seeking regular income. However, balancing the desire for current income with long-term growth prospects is crucial. Conduct thorough research, consider your overall financial strategy, and stay informed about tax implications when investing in dividend-paying stocks.