10 Highest Dividend Paying Stocks In India 2024
10 Highest Dividend Paying Stocks In India 2024
Blog Article
10 Highest Dividend Paying Stocks In India 2024
Investing in stocks that pay high dividends can be a smart way to generate passive income and grow wealth. In India, many investors look for the highest dividend paying stocks to get regular returns. Dividend stocks are appealing because they offer a combination of income through dividends and the potential for capital appreciation. By focusing on the highest dividend-paying stocks in India, investors can ensure a steady income stream while potentially benefiting from the growth of these companies. In this article, we'll dive into dividend stocks, their benefits, the key ratios to look at, and much more to help you make informed investment decisions.
Investing in stocks that pay high dividends can be a smart way to generate passive income and grow wealth. In India, many investors look for the highest dividend paying stocks to get regular returns. Dividend stocks are appealing because they offer a combination of income through dividends and the potential for capital appreciation. By focusing on the highest dividend-paying stocks in India, investors can ensure a steady income stream while potentially benefiting from the growth of these companies. In this article, we'll dive into dividend stocks, their benefits, the key ratios to look at, and much more to help you make informed investment decisions.
What is a Dividend?
A dividend is like a reward that a company gives to its shareholders. It's usually in the form of money or extra shares. When a company makes a profit, it might decide to share some of that profit with its shareholders. This sharing is called a dividend. It's a way for the company to say "thank you" to the people who own its stock. So, when you own stock in a company that pays dividends, you get a little of its profits!
What is Dividend Stocks?
Best Dividend paying stocks are like special kinds of stocks. When you own them, the company regularly gives you some of its profits. It's like getting a small bonus for being a shareholder. These profits are called dividends. So, when you buy these stocks, you're not just hoping the stock price goes up; you're also getting paid regularly just for owning the stock! That's why they're called dividend-paying stocks. They're a popular choice for investors who want both regular income and the chance for their investment to grow.
Overview of Top 10 Dividend Paying Stocks in India
Here is a complete overview of the best dividend stocks of all time in India, along with their Volume, Market Cap, and Closing Price.
1. Aster DM Healthcare Ltd.
In the Middle East and India, DM Healthcare Private Limited is a conglomerate in the healthcare industry, this is one of the highest dividend paying stock in India that runs pharmacies, medical facilities, diagnostic centres, and hospitals. It provides management and consulting services in addition to primary, secondary, and tertiary healthcare.
CMP: Rs 349.95
Market Cap: 17480.46 Cr
Volume: 536402
Payout Ratio: 18.19
2. Xchanging Solutions Ltd.
Xchanging Solutions Ltd provides information technology services as well as business process outsourcing.The company's major offerings span strategic consultation, application maintenance/support, software development, and application deployment services. Among its goods and services is ITO.
Closing Price: Rs 120.75
Market Cap: 1345.2 Cr
Volume: 1186725
Payout Ratio: 27.08
3. IL&FS Investment Managers Ltd.
Infrastructure Leasing & Financial Services Limited (IL&FS) and its subsidiary IL&FS Investment Managers Limited (IIML) primarily focus on infrastructure financing, asset management, and investment banking.
Closing Price: Rs 11.2
Market Cap: 351.72 Cr
Volume: 279271
Payout Ratio: 3.26
4. Vedanta Ltd.
Vedanta Limited is an Indian multinational mining company based in Mumbai and also one of the Highest Dividend Paying Stocks in india. It primarily operates iron ore, gold, and aluminium mines located in Goa, Karnataka, Rajasthan, and Odisha.
Closing Price: Rs 431.4
Market Cap: 160360.28 Cr
Volume: 13141209
Payout Ratio: 2.59
5. Coal India Ltd.
The world's biggest producer of coal is Coal India Ltd. Additionally, the company produces different grades of coking and non-coking coal for a range of purposes.
Closing Price: Rs 463.15
Market Cap: 285426.76 Cr
Volume: 14166217
Payout Ratio: 0.46
6. Styrenix Performance Materials Ltd.
Styrolution ABS (India) Ltd is a leading company in India known for pioneering the development of the market for Acrylonitrile Butadiene Styrene (ABS), a versatile engineering thermoplastic material. The company markets its ABS polymer under the brand name ABSOLAC.
Closing Price: Rs 1860
Market Cap: 3270.92 Cr
Volume: 199427
Payout Ratio: 0.95
7. Indian Oil Corporation Ltd.
The principal national oil corporation and downstream petroleum major in India is Indian Oil Corpn. Ltd. The nation's largest and most expansive network of petrol and diesel stations is run by this corporation.
Closing Price: Rs 162.3
Market Cap: 229187.7 Cr
Volume: 18870042
Payout Ratio: 0.27
8. Embassy Office Parks REIT
Office Parks at Embassy In India, real estate and related assets that generate rent or income are owned, managed, and invested in by REITs. It is the largest official REIT by area in Asia and the first publicly traded REIT in India.
Closing Price: Rs 342.75
Market Cap: 32489.06 Cr
Volume: 1257495
Payout Ratio: 2.13
9. Bank of Maharashtra
Among Maharashtra's public sector banks, Bank of Maharashtra boasts the most extensive branch network.The bank provides a range of services, including personal banking, which includes deposit accounts, savings accounts, credit cards, RTGS, personal and education loans, and demat services.
Closing Price: Rs 64
Market Cap: 45320.79 Cr
Volume: 8698268
Payout Ratio: 0.47
10. Bharat Petroleum Corporation Ltd.
One of the top companies in India's petroleum industry is Bharat Petroleum Corp. Ltd.The corporation explores, produces, and sells petroleum and petroleum-related products in retail stores.
Closing Price: Rs 615.65
Market Cap: 133550.04 Cr
Volume: 10935777
Payout Ratio: 0.2
Risks Associated with High-Dividend Stocks
While high-dividend stocks can offer attractive income opportunities, they also come with certain risks that investors should be aware of:
Dividend Cuts: Companies may reduce or eliminate dividend payments during financial difficulties or economic downturns. High dividend yields may be unsustainable if a company's earnings decline, leading to potential dividend cuts that can negatively impact investor income.
Market Volatility: High dividend stocks can be more sensitive to market fluctuations, especially if the company's fundamentals deteriorate. Changes in interest rates, economic conditions, or industry trends can affect stock prices and dividend yields, leading to increased volatility in high-dividend stocks.
Sector-Specific Risks: Some sectors, such as utilities and consumer staples, are traditionally associated with high dividend yields. However, these sectors may face regulatory challenges, changing consumer preferences, or technological disruptions that could affect dividend sustainability.
Interest Rate Sensitivity: High dividend stocks can be sensitive to changes in interest rates. When interest rates rise, fixed-income investments become more attractive relative to dividend-paying stocks, potentially leading to downward pressure on stock prices and dividend yields.
Benefits of Dividend Stocks in 2024
In 2024, dividend stocks offer several advantages for investors:
Steady Income: Dividend-paying stocks provide a reliable income stream, making them attractive for investors seeking regular cash flow.
Potential for Growth: Many dividend-paying companies have a history of stable earnings and strong financial performance, which can translate into potential capital appreciation over time.
Inflation Hedge: Dividend payments often increase over time, providing a hedge against inflation and helping investors maintain purchasing power.
Portfolio Stability: Dividend stocks tend to be less volatile than non-dividend-paying stocks, offering stability and reducing overall portfolio risk.
Signal of Financial Health: Companies that regularly pay dividends show they have stable earnings and cash flow. This consistency indicates a strong and healthy business, providing reassurance to investors.
How to Choose Profitable Dividend Stocks to Buy
When selecting dividend stocks for investment, it's crucial to consider several factors to ensure profitability and sustainability.
Here are some steps to guide you in choosing profitable dividend stocks:
Minimum Dividend Payout Ratio of 40%: Look for companies with a dividend payout ratio of at least 40%. This ratio reflects the proportion of earnings paid out as dividends to shareholders. A higher payout ratio indicates that the company distributes a significant portion of its profits to investors. However, it's essential to consider the company's maturity level and growth prospects. Newer companies focused on expansion may have lower payout ratios as they reinvest earnings into growth initiatives.
Dividend Yield Over 3%: Target dividend yields above 3%. The dividend yield is the annual dividend payment relative to the stock price, expressed as a percentage. While a higher dividend yield may seem attractive, evaluating the company's financial health and sustainability is essential. A declining stock price can artificially inflate the dividend yield, so consider both the yield and the company's fundamentals.
Clear-cut Dividend Policy: Assess the company's dividend policy and track record. Look for companies with a consistent history of effectively offering dividends and managing debts. A clear dividend policy demonstrates the company's commitment to returning value to shareholders and maintaining financial stability. Stability and regularity in dividend payments are indicators of a sound dividend policy, valued by both management and shareholders for wealth maximization.
Tax Implications of Dividend Income in India
The Finance Act 2020 significantly changed how dividend income is taxed in India. Here’s what you need to know:
Taxation Shift to Investors: Dividends are now taxable in the hands of investors at their applicable income tax slab rates. Previously, dividends were tax-free for investors, as companies were responsible for paying Dividend Distribution Tax (DDT). With the abolition of DDT, individual investors now need to pay tax on their dividend income according to their income tax bracket.
Removal of Section 115BBDA: The previous rule under section 115BBDA, which imposed a 10% tax on dividend receipts exceeding Rs 10 lakh for resident individuals, Hindu Undivided Families (HUFs), and firms, has been withdrawn. This means that all dividend income is now taxed based on the investor's income tax slab.
Tax Deducted at Source (TDS): Companies and mutual funds are required to deduct TDS at a rate of 10% on dividends paid to investors if the total dividend amount exceeds Rs 5,000 in a financial year.
Let’s consider an example to understand how TDS works under the new regulations.
Example Scenario: Mr. Patel received a dividend of Rs. 6,000 from Hindustan Zinc Ltd. on June 15, 2023.
Calculation: Since the dividend income exceeds Rs. 5,000, the company must deduct TDS at 10%.
TDS Amount:
TDS = Dividend Income * TDS Rate
TDS = Rs. 6,000 * 0.10
TDS = Rs. 600
So, Rs. 600 will be deducted as TDS from Mr. Patel’s dividend income.
Balance After TDS Deduction:
Balance = Dividend Income - TDS
Balance = Rs. 6,000 - Rs. 600
Balance = Rs. 5,400
Mr. Patel will receive Rs. 5,400 after the TDS deduction.
Important Ratios to Consider Before Investing in Dividend Stocks
Before diving into dividend stocks, it's essential to understand and consider certain key ratios:
Dividend Yield: This ratio compares the annual dividend payment per share to the stock's current price. It helps investors assess how much income they can expect relative to their investment.
Payout Ratio: The payout ratio measures the percentage of a company's earnings paid out as dividends. A lower payout ratio indicates that a company has more room to sustain or increase its dividend payments in the future.
Earnings Per Share (EPS): EPS reflects a company's profitability and indicates how much of its earnings are allocated to each outstanding share of stock. A higher EPS generally means that a company has more funds available to pay dividends.
Dividend Growth Rate: This rate measures the annualized rate at which a company increases its dividend payments over time. A consistent and healthy dividend growth rate suggests that a company is financially stable and committed to rewarding shareholders.
What is Dividend Yield?
The dividend yield is like a measuring tape for how much money you can make from owning a stock's dividends. It's a way to see how much bang you get for your buck. Here's how it works: you take the annual dividend per share (that's how much money the company gives you for each share you own) and divide it by the stock's price per share. This gives you a percentage, which is the dividend yield.
So, if a stock's price is ₹100 per share and it pays ₹5 in dividends per year, the dividend yield would be 5%. It's like saying, "For every ₹100 you invest in this stock, you'll get ₹5 back in dividends each year." Dividend yield helps you compare different stocks and see which ones give you the most return for your investment.
Conclusion
Investing in the Highest Dividend Paying stocks last 10 years can be a rewarding strategy for generating regular income and achieving long-term financial growth. Investors can make informed decisions by understanding dividend-paying stocks, evaluating important ratios, and considering factors like dividend yield and payout ratio. Knowing the risks associated with high dividend stocks and the tax implications of dividend income in India is crucial. With thorough research and a clear investment strategy, you can build a robust portfolio that leverages the benefits of high dividend-paying stocks. Happy investing!
Frequently Asked Questions
1. What are the highest dividend paying stocks in India?
The highest dividend paying stocks in India are Aster DM Healthcare, Xchanging Solutions, IL&FS Investment Managers, Vedanta and Coal India which are known for their consistent and highest dividend payout stocks in India.
2. How do I find high dividend-paying stocks?
To find high dividend-paying stocks, look for companies with a strong track record of dividend payments, a high dividend yield, and a sustainable dividend payout ratio. Financial news websites, stock screeners, and investment advisors can also provide valuable insights.
3. What are Highest Dividend Paying Stocks last 10 years in India
1. Vedanta Ltd.
2. Aster DM Healthcare Ltd.
3. Embassy Office Parks REIT
4. Hindustan Zinc Ltd.
5. Styrenix Performance Materials Ltd.
5. Are high dividend-paying stocks a good investment?
High dividend-paying stocks can be a good investment for those seeking regular income and potential capital appreciation. However, it's important to evaluate the company's financial health, dividend sustainability, and market conditions before investing.
6. What are the risks of investing in high dividend-paying stocks?
The risks include potential dividend cuts, market volatility, sector-specific challenges, income dependency, interest rate sensitivity, and company-specific risks. Thorough research and diversification can help mitigate these risks.
7. How are Dividends taxed in India?
In India, dividend income is taxed at the applicable income tax rate based on the investor's tax slab. Companies deduct TDS at 10% on dividend payments exceeding ₹5,000 in a financial year. The tax treatment may vary based on the type of investment and the investor's tax status.