shares such as
, Corp, Power Finance Corp, and is currently trading at a dividend yield of between 10% and 20%.
“Our analysis indicates that high dividend yielding companies, especially in the oil and gas, power and energy sectors, outperformed the benchmark Nifty by over 24% with an average stock price appreciation of 4.8% and a gain of 12.9% so far this year. Has outperformed with higher dividend yield. Nifty index declined by 11.3%,” said Gaurav Dua, Head – Capital Markets Strategy, Sharekhan. “We advise investors to buy Oil India, Power Grid and Coal India. Because these stocks are a play on both growth and a high dividend yield.”
The dividend yield is the ratio of the annual dividend to the company’s stock price. For example, if the annual dividend is ₹10 per share and the stock trades at ₹100, the dividend yield is 10%. This ratio increases when stock prices fall or vice versa. Analysts said the average dividend yield of India’s top 100 companies could be around 1.5 per cent.
The Nifty, Nifty Midcap 100 and Nifty Smallcap 100 indices have fallen 17%, 22% and 32% respectively from their 52-week highs, while the yield on the 10-year GSEC is hovering around 7.5%.
With the market outlook uncertain in the near term, analysts are advising companies with strong cash flows and a healthy dividend-paying track record.
Jitendra Upadhyay, an analyst at Bonanza Wealth Management, said stocks with high dividend yields are seen as a protective strategy in volatile markets like the current market.
PSUs like Coal India, Oil India, NLC, IRCON and PTC are among the highest paying companies. This trend may continue as the government may demand higher dividend as meeting the disinvestment targets is expected to be a challenge this year.