Top 5 Dividend Paying Stocks in India 2021 | List of Dividend Paying Stocks in India: Bajaj Auto is the Number 1 dividend-paying stock in India with more than 4.5 ratings.
Dividend stocks are companies that pay out regular dividends. Dividend stocks are usually well-established companies with a track record of distributing earnings back to shareholders. A dividend can be described as a reward that publicly-listed companies extend to their shareholders, and its source is the company’s net profit. Such rewards can either be cash, cash equivalent, shares, etc., and are mostly paid from the remaining share of profit once essential expenses are met. However, companies may decide to retain their accumulated profits to reinvest in the business or reserve it for future use. Dividend investing is a strategy that gives investors two sources of potential profit: one, the predictable income from regular dividend payments, and two, capital appreciation over time. Buying dividend stocks can be a great approach for investors looking to generate income or those simply looking to build wealth by reinvesting dividend payments. This strategy can also be appealing for investors looking for lower risk. Stocks that pay dividends can be some of the safest to own. But there can still be pitfalls, and dividend stocks can be risky if you don’t know what to avoid. Not every dividend stock can maintain a payout in every economic environment — something the COVID-19 pandemic has demonstrated — but a diversified portfolio of dividend stocks can get you a steady income. So, have a look at the top
dividend-paying buying stocks in India 2021 also the highest dividend-paying stocks in India 2021.
Top 5 Dividend Paying Stocks in India 2021
No 1. Bajaj Auto
Bajaj Auto is a two-wheeler manufacturer that has proven itself over the years. What differentiates Bajaj Auto from other two-wheeler makers in India is its relentless focus on markets outside of India. The company has managed to de-risk its business by not being over-reliant on any one geography or product. The company is by far India’s largest motorcycle and three-wheeler exporter. The company’s revenue share from exports has increased from 28.2% in FY10 to 42% in FY20. The company has superior return ratios with a ROCE of 29.61% and an ROE of 23.18%. Apart from all this, the company is a high dividend-paying stock with a payout ratio of 66.63% in FY20 and provides a dividend yield of 3%. Most importantly, the company has paid out above 40% of its net profits as dividends consistently. It is also the highest dividend-paying stock last 10 years in India and the best dividend-paying stock for the long term in India. It is currently ranked no. 1. in the top dividend-paying stocks in India 2021.
No 2. Gail
Gail enjoys a dominant position in the natural gas transmission business with a market share of 70%, catered to by its large pipeline network covering 12200 km. The setting up of pipelines requires large investments and navigating a complex regulatory framework. GoI’s focus on increasing the share of natural gas in the country’s overall energy mix to 15.0% from 6.5% currently has resulted in the government taking several steps to increase natural gas consumption. Going forward, the demand for natural gas is expected to remain healthy, driven by the City Gas Distribution (CGD) and the fertilizer sector. On the other hand, Petrochemical, LPG, and LHC segments are exposed to the commodity price risk as sustained low crude oil prices result in low realizations for petroleum products. Also, the company is dependent on government regulations for its tariffs. It is currently ranked no. 2. in the top dividend-paying stocks in India 2021.
No 3. Hindustan Zinc
Hindustan Zinc has a mined metal capacity of around 1.2 MTPA and smelter capacities of 8,90,000 TPA for zinc, 205,000 TPA for lead, and 800 TPA for silver. It is the second-largest zinc-lead miner and fourth-largest zinc-lead smelter globally. With a market share of over 75% by volume, it enjoys a dominant position in the domestic zinc market. Furthermore, high entry barriers, such as capital-intensive operations and lack of zinc ore mines, lend a significant competitive edge to the business risk profile. Presence in global markets also enhances revenue diversity; in fiscal 2020, export accounted for around 20% of revenue. High operating efficiency is driven by significant backward integration and low-cost, high-grade zinc reserves. Operations are integrated across the entire value chain. The financial risk profile is supported by a large network, strong liquid surplus, and absence of long-term debt. Cash and equivalent stood at Rs 22,247 crore as of March 31, 2020. It is currently ranked no. 3. in the top dividend-paying stocks in India 2021.
No 4. SJVN
SJVN is a Mini Ratna company promoted by the GoI (59.92%) and the GOP (26.85%); the balance stake in the entity is held by the public. It currently has an installed capacity of 2,014.5 MW and is currently developing projects of capacity 2,556 MW. Apart from these, other hydro projects in SJVN’s portfolio are under survey and investigation, DPR preparation, feasibility study stages. Its flagship project, the 1,500-MW Nathpa Jhakri hydropower project (HPP), has completed 15 years of operations. This is mitigated through its competitive cost of generating power, which has resulted in relatively lower debtor days for SJVN compared to other Central Public Sector Undertakings operating in this space. It is currently ranked no. 4. in the top dividend-paying stocks in India 2021.
No 5. ITC LTD.
ITC LTD., which was earlier known as Imperial Tobacco Company, started as a cigarette manufacturing company with brands like Goldflake, Flake, Classic under its banner. It has expanded into education and stationery products, hospitality, paperboard, and packaging, among others. The acquisition of Sunrise Foods Pvt Ltd is expected to strengthen its market position in the spices segment and further improve diversity. A strong brand, a wide product portfolio, an established distribution network, and robust research and development capability have enabled the company to consolidate its position as the leader in the Indian cigarettes market. The strong brand loyalty of cigarette smokers is reflected in the sustained market share and profitability over the years, notwithstanding the increase in duties. Healthy internal cash accrual, low debt, and robust liquidity have strengthened the financial risk profile. ITC has an operating margin of 34.52%. The company has zero debt against a large tangible net worth of over Rs 59,084 crore. Over the past 10 years, the company has maintained a dividend payout of over 50%, currently yielding 4.70%. It is currently ranked no. 5. in the top dividend-paying stocks in India 2021.