Dividend stocks: Investors are always on the lookout for stocks that can not only give them stellar returns but also regular income in the form of dividends. While the public sector (PSU) stocks have been in a massive run-up over the last few years, they are also well known for generously doling out dividends, sometimes with a yield higher than that offered by several government schemes and bank fixed deposits (FDs).
Additionally, most of the high-paying dividend stocks from the PSU space are also low-priced, and less than ₹500, barring one.
What is a dividend yield and why does it matter?
Dividend yield shows the percentage of a company’s share price that is paid out to shareholders yearly in the form of dividends. It is a crucial metric for those investors who are income-focused, as it is an indicator of how much cash flow they can likely generate from their investment.
A higher dividend yield suggests more income for investors. But it is not an indicator of the company’s financial health and stability. A dividend yield of 5% or more is considered to be good.
High dividend-paying PSU stocks
According to a study by Axis Securities, the highest dividend-paying PSU stocks have a yield of 3% or above. Most of the stocks on the list belong to the oil and gas, metals or financials sectors.
Chennai Petroleum Corporation tops the list with a 12-month dividend yield of 7%. The PSU stock has paid ₹55 as a dividend.
It is followed by Maharatna PSU stock Coal India, which also has a dividend yield of 7%, following a ₹26.4 per share payout over the last year. The metal and mining company is part of the Nifty 50 index and commands a market capitalisation of over ₹2 lakh crore.
PSU stocks Union Bank of India, Oil and Natural Gas Corporation (ONGC) and NMDC are next on the list, offering a dividend yield of 6% each following a payout of ₹8.4, ₹13.5 and ₹3.8 per share, respectively.
National Aluminium Corporation (NALCO) followed suit with a 5% dividend yield ( ₹10 dividend in the last 12 months).
Another oil PSU stock, BPCL, is also on the list as the PSU stock paid a dividend of ₹15.5, resulting in a dividend yield of 4%. Power Finance Corporation, RITES, Balmer Lawrie, REC, Power Grid and Gail (India) also have dividend yields of 4%.
Last on the list are Bank of India and Canara Bank, offering a dividend yield of 3%.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
