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  • Jan 21, 2023 - 5 High Dividend Yield Stocks to Add to Your Watchlist

5 High Dividend Yield Stocks to Add to Your Watchlist

Jan 21, 2023

5 High Dividend Yield Stocks to Add to Your Watchlist

  • "Most high-return businesses need relatively little capital. Shareholders of such a business usually will benefit if it pays out most of its earnings in dividends or makes significant stock repurchases." - Warren Buffett's letter to shareholders, 1992.

With Indian share markets already facing high volatility this year, investors are heavily relying on dividend paying stocks to generate returns.

Historical data shows that high dividend yield stocks tend to perform better when markets are down compared to others.

What makes this more exciting is if you invest in high dividend yield penny stocks or low-priced stocks paying lucrative dividends.

Investing in low-priced stocks that pay big dividends can be advantageous because they sometimes could offer a higher yield than stocks that are priced higher.

Additionally, these stocks may have the potential for significant capital appreciation if the company performs well.

Here are five low-priced stocks with attractive dividend yields.

#1 PTC India Ltd.

First on the list is PTC India, a power trading company.

The stock's current dividend yield stands at 7.3%. This means that for every Rs 100 invested in the company you earn a dividend of Rs 7.3.

Its five-year average dividend yield is 8.7%, which is higher than the fixed deposits rates that banks currently provide.

What does PTC India do?

The company is regarded as a pioneer in developing power trading in India.

Over the years, the company has diversified its service offerings. It has recently forayed into the wind energy business by setting up a new company - PTC Energy Limited.

It is also exploring opportunities in green hydrogen, and battery energy storage systems.

Have a look at the table below to get a gist of PTC India's rich history of paying dividends for the past decade.

Consistent Dividends at a Growing Rate

Year Ending Dividend Per Share (Rs) Dividend Yield (%)
31-Mar-22 7.80 9.47
31-Mar-21 7.50 9.61
31-Mar-20 5.50 14.25
31-Mar-19 4.00 5.44
31-Mar-18 4.00 4.59
31-Mar-17 3.00 3.23
31-Mar-16 2.50 3.92
31-Mar-15 2.20 2.72
31-Mar-14 2.00 2.96
31-Mar-13 1.60 2.69
Data Source: Equitymaster, Ace Equity
Dividend yield as per 31 March 2022

The company has been consistently paying dividends since 2002. Have a look at the table below to see PTC India's dividend payout and other key ratios.

Ratio analysis

Year Ending Dividend Payout ratio (%) ROE (%) ROCE (%)
31-Mar-22 45.6 12.1 9.9
31-Mar-21 49.5 10.6 10.2
31-Mar-20 44.3 10.0 10.6
31-Mar-19 27.8 12.8 11.9
31-Mar-18 59.2 4.4 8.1
Data Source: Ace Equity

The consistency in dividend payments is on the back of PTC India's healthy cash & cash equivalents.

PTC India cash reserves (2018-2022)

Rs m, consolidated 2018 2019 2020 2021 2022
Net cash inflow 891 (2,716) 3,092 5,181 3,076
Closing cash & cash equivalent 3,834 1,118 4,210 9,391 12,467
Data Source: Ace Equity

In recent sessions, share price of PTC India has seen a sharp up-move after there were reports of Adani group eyeing a stake in the power company.

Not just Adani, but according to a report by The Economic Times, Tata Power, Greenko, and JSW Energy have also been approached to access their interest in buying a strategic stake.

If Adani does acquire stake in the company, it would bode well for the Adani group as it has one of the biggest capacities in the power sector.

To know more about the company, check out PTC India's financial factsheet and its latest quarterly results.

#2 SJVN

Next on the list SJVN.

A mini-ratna central public sector entity (CPSE), SJVN is involved in the power generation business. The company is also involved in the hydro, thermal and solar power segments.

The stock's current dividend yield stands at 5%. This means that every Rs 100 invested in the company will generate a dividend of Rs 5.

Its five-year average dividend yield is 8.1%, which is higher than the fixed deposits rates that banks currently provide.

Dividend History of SJVN (2012-2022)

Year Ending Dividend Per Share (Rs) Dividend Yield (%)
31-Mar-22 1.70 6.19
31-Mar-21 2.20 8.45
31-Mar-20 2.20 10.63
31-Mar-19 2.15 8.88
31-Mar-18 2.10 6.30
31-Mar-17 2.75 8.12
31-Mar-16 1.10 3.84
31-Mar-15 1.05 4.26
31-Mar-14 0.98 4.67
31-Mar-13 0.96 5.05
Data Source: Ace Equity
Dividend yield as per 31 March 2022

SJVN has a rich dividend history, having declared dividends since 2005.

Since its listing in May 2010, the company has consistently maintained dividend yields above 3.5%. In recent years, the dividend per share has increased, resulting in higher yields.

The company's dividend payout ratio has also remained above 50% for the past five years.

Ratio analysis

Year Ending Dividend Payout ratio (%) ROE (%) ROCE (%)
31-Mar-22 67.5 7.6 8.8
31-Mar-21 52.5 13.3 15.2
31-Mar-20 55.2 13.4 16.7
31-Mar-19 61.8 12.4 15.5
31-Mar-18 67.4 11.0 13.0
Data Source: Ace Equity

SJVN will soon be included in the list of green hydrogen stocks as the company has guided for entering the space once it successfully commissions its pilot project in Himachal Pradesh.

What's more, the company has a solid solar portfolio, with around 1,500 megawatts (MW) of solar projects under construction and 2,500 MW under the pipeline.

However, debt levels remain a concern. As the company's renewable portfolio gets a push, it has taken on debt to fund capex.

SJVN debt metrics (2018-2022)

  2018 2019 2020 2021 2022
Debt to equity (x) 0.21 0.19 0.18 0.17 0.52
Interest coverage (x) 17.31 8.15 6.71 22.79 6.84
Data Source: Ace Equity

The company may decide to declare lower dividend this year as it cleans up its balance sheet.

To know more about the company, check out SJVN's financial factsheet and its latest quarterly results.

#3 National Aluminum Company (NALCO)

Third on the list is NALCO.

Incorporated in 1981, NALCO is a government company that operates in the mining, metals, and power sector. It is under the ownership of the Ministry of Mines and the government of India.

It is the country's largest integrated bauxite-alumina-aluminium-power complex, with bauxite mining, alumina refining, aluminium smelting, and casting.

It is also the lowest-cost producer of metallurgical grade alumina in the world and lowest-cost producer of bauxite in the world.

The stock's current dividend yield stands at 7.7%. This means that every Rs 100 invested in the company will generate a dividend of Rs 7.7.

Its five-year average dividend yield is 8%, which is higher than the fixed deposits rates that banks currently provide.

NALCO Dividend History (2013-2022)

Year Ending Dividend Per Share (Rs) Dividend Yield (%)
31-Mar-22 6.50 5.34
31-Mar-21 3.50 6.48
31-Mar-20 2.75 9.43
31-Mar-19 5.75 10.38
31-Mar-18 5.70 8.54
31-Mar-17 2.80 3.68
31-Mar-16 2.00 5.04
31-Mar-15 1.75 3.75
31-Mar-14 1.50 3.78
31-Mar-13 1.25 3.77
Data Source: Ace Equity
Dividend yield as per 31 March 2022

The company's dividend payout ratio stood at 40.5% in financial year 2022.

NALCO's financials got a boost during the year on the back of higher aluminium prices. The company broke several records and reported highest ever sales, highest ever revenues (Rs 141.8 bn) and highest ever net profit (Rs 29.5 bn).

Being a cyclical stock, NALCO's net profit is closely linked to aluminum prices. The company doubles it earnings on every US$400 a tonne increase in aluminium price.

However, aluminium prices have been extremely volatile recently, owing to geopolitical issues that the world has been dealing with.

Moreover, NALCO has been facing issues in the procurement of coal due to disruption in the global demand-supply.

Therefore the company's streak of high dividend payouts could take a hit going forward.

Ratio analysis

Year Ending Dividend Payout ratio (%) ROE (%) ROCE (%)
31-Mar-22 40.5 25.4 34.2
31-Mar-21 49.5 12.6 12.8
31-Mar-20 376.6 1.4 2.3
31-Mar-19 61.9 16.5 26.0
31-Mar-18 82.1 13.0 19.6
Data Source: Ace Equity

But it will continue the streak of paying dividends. The company's MD and chairman last year said it will use cash reserves for paying out dividends in the future.

To know more, check out NALCO's financial factsheet and its latest quarterly results.

#4 NLC India

Next on the list is NLC India.

Formerly Neyveli Lignite Corporation, NLC India is a CPSE with 'Navratna' status and is engaged in the mining of lignite and electricity generation.

The stock's current dividend yield stands at 3.4%. This means that every Rs 100 invested in the company will generate a dividend of Rs 3.4.

Its five-year average dividend yield is 7.5%, which is higher than the fixed deposits rates that banks currently provide.

NLC India Dividend History (2013-2022)

Year Ending Dividend Per Share (Rs) Dividend Yield (%)
31-Mar-22 3.00 4.80
31-Mar-21 2.50 4.96
31-Mar-20 7.06 16.05
31-Mar-19 4.53 6.51
31-Mar-18 4.50 5.37
31-Mar-17 7.34 6.84
31-Mar-16 3.00 4.23
31-Mar-15 2.80 3.98
31-Mar-14 2.80 4.58
31-Mar-13 2.80 4.25
Data Source: Ace Equity
Dividend yield as per 31 March 2022

NLC India has a track record of paying dividends since listing in 1999.

In years 2000 and 2001, the company's dividend yield was above 11% as it was trading at less than Rs 10 per share.

Between 2008 and 2015, the yields came down significantly if compared to earlier years.

Ratio analysis

Year Ending Dividend Payout ratio (%) ROE (%) ROCE (%)
31-Mar-22 35.8 8.1 9.3
31-Mar-21 26.5 10.0 8.8
31-Mar-20 74.4 11.3 9.6
31-Mar-19 41.7 11.8 10.9
31-Mar-18 35.4 15.4 13.4
Data Source: Ace Equity

Due to higher power demand and max utilization from its mines, the company reported improved margins and profits in financial year 2022.

In its earnings call for September 2022 quarter, the company's management informed that it has massive capex lined up for the coming years.

For the next eight years up to 2030, capex might be in the range of Rs 720 bn. For the next two years (2023 and 2024), the capex stands at Rs 82 bn.

Given such high capex, it remains to be seen whether NLC India will be a frontrunner in paying big dividends going forward.

To know more about the company, check out NLC India's financial factsheet and its latest quarterly results.

#5 IRCON International

Last on the list is IRCON International.

IRCON is a mini ratna category - I public sector undertaking (PSU) since 1998.

The company earns revenue mostly from the railway segment. However, it has diversified into roads, buildings, electrical substation and distribution, airport construction as well.

IRCON is one of the few agencies through which the Ministry of Railways has implemented railway projects throughout the country for four decades. It has completed more than 300 infrastructure projects in India.

The stock's current dividend yield stands at 4.1%. This means that every Rs 100 invested in the company will generate a dividend of Rs 4.1.

Its five-year average dividend yield is 5.3%.

IRCON Dividend History (2013-2022)

Year Ending Dividend Per Share (Rs) Dividend Yield (%)
31-Mar-22 2.50 6.29
31-Mar-21 3.00 3.40
31-Mar-20 23.75 6.23
31-Mar-19 21.55 5.37
31-Mar-18 20.45 -
31-Mar-17 54.61 -
31-Mar-16 85.00 -
31-Mar-15 92.00 -
31-Mar-14 92.00 -
31-Mar-13 75.00 -
Data Source: Ace Equity
Dividend yield as per 31 March 2022

IRCON has a track record of paying dividends since 1998.

In the past few years, the company has brought down its debt to almost nil level, resulting in higher dividend payouts.

The below table shows the consistency it has maintained in dividend payout ratios and return ratios.

Ratio analysis

Year Ending Dividend Payout ratio (%) ROE (%) ROCE (%)
31-Mar-22 39.7 11.7 16.3
31-Mar-21 36.1 8.4 18.2
31-Mar-20 46.0 11.2 18.0
31-Mar-19 45.0 11.1 14.6
31-Mar-18 47.1 10.7 11.4
Data Source: Ace Equity

In October 2022, railway stocks rallied on the back of the government's push on rail infrastructure. Railway stocks received multiple orders, including IRCON.

In the latest quarterly results, the company's management has sent out feelers of good times ahead. IRCON saw its profit jump close to 40% YoY on the back of robust growth in topline.

With its orderbook piling up, there's a high chance that the company can continue its profitable streak.

What's more, IRCON is trading at single digit price to earnings (PE) multiple despite its good fundamentals. This should offer some comfort in valuations.

To know more, check out IRCON's financial factsheet and its latest quarterly results.

Investing in high dividend yield stocks

Dividend investing is important because it can provide a steady stream of income to investors, regardless of the performance of the stock market.

For example, imagine that you are a retiree living on a fixed income. You want to make sure that your investments provide enough income to cover your living expenses, even during tough economic times.

High dividend yield stocks can provide this steady income stream, because companies that pay dividends are often established and financially stable, and then you can always select companies that have a track record of paying dividends to shareholders, even during difficult economic conditions.

So don't wait out...shortlist dividend paying stocks in just a few seconds using Equitymaster's powerful stock screener.

It's a powerful and flexible tool which allows you to run your own custom queries.

Here's a snapshot showing the list of high dividend yield stocks on Equitymaster's stock screener.

chart

Here are the dividend screens that should help you get started in the world of dividend investing.

Happy Investing!

Now Before You Go, This is Something You Need to Know...

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Now, these are not ordinary defence stocks.

Very few people know about the real potential of these companies.

Because these companies are working silently on developing next-generation warfare technologies.

Our research says that these 3 defence stocks could potentially provide you some of the biggest gains of your lifetime.
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You Can Get Full Details Here...

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

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