Helping You Build Wealth With Honest Research
Since 1996. Try Now

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

India's Third Giant Leap
Discover the Best Category of Stocks to Ride this Mega
Opportunity at Our Upcoming Special Event




**Important: We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
**By submitting your email address, you also sign up for Profit Hunter, a daily newsletter from Equitymaster
covering exciting investing ideas and opportunities in India.


AD

Top 5 AI Stocks Which Pay Good Dividends

Jun 5, 2023

Top 5 AI Stocks Which Pay Good Dividends

Artificial Intelligence (AI) has taken the world by storm, revolutionising industries and transforming our lifestyles.

AI has become a part of our daily lives, with its presence felt in numerous applications and services.

It has slowly seeped into virtually every sector of society, including finance, where investors rely on computer algorithms to execute trades and re-balance portfolios.

For investors, AI isn't just a tool that can improve their stock-picking universe but an industry in which they can gain broad exposure. Investing in AI stocks offers investors the best of both worlds.

On the one hand, there is the potential for capital gains as the AI industry continues to advance and digitalisation initiatives gain momentum.

On the other hand, investors can also enjoy passive income through dividends while they wait for their investments to grow.

By combining the upside potential of AI with the steady income from dividends, these stocks present a compelling investment opportunity.

If you're an investor looking to capitalise on the AI revolution, the following stocks should be on your shortlist.

#1 Bosch

Leading the list is Bosch.

Bosch is a leading supplier of technology and services in mobility solutions, industrial technology, consumer goods, and energy and building technology.

For the financial year 2023, this stock declared a dividend of Rs 280 or 2,800% on the face value of Rs 10 per share.

The record date for the same is 14 July 2023.

Bosch has remained a consistent dividend payer. Since 2001, the company has declared 29 dividends.

The five-year average dividend payout ratio stands at 50.9%. The dividend yield over the past five years has averaged 0.9%.

Bosch's Dividend History (2018-2022)

  Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
Dividend per share (Adj.) * (Rs) 103.4 105 105 115 209.9
Dividend payout ratio (%) 22.3 19.4 47.7 70.6 50.9
Dividend Yield (%) 0.6 0.6 1.1 0.8 1.3
*Adjusted for bonus issues and stock splits
Data source: Equitymaster

Going forward, Bosch plans to expand into autonomous driving.

The company is investing heavily in AI research and development to create advanced driver assistance systems (ADAS) and autonomous vehicle technologies.

In 2017, the group founded Bosch Center for Artificial Intelligence (BCAI) to apply cutting-edge AI technology throughout Bosch products and services, resulting in innovative solutions.

Today, the AI strategies of Bosch are implemented in more than 185 projects across India, the US, Israel, Germany, and China. Bosch AI collects real-time data from different business departments and conducts AI research on safe, reliable, and explainable AI.

Bosch has said that by 2025, all its products will either use AI or will be manufactured with AI.

It has a few products under the arm already. The Bosch Indego S+ is a robotic lawn mower that can be voice-controlled via Amazon Alexa.

For more details, see the Bosch's financial factsheet and latest quarterly results.

#2 Tata Elxsi

Second on the list is Tata Elxsi.

Tata Group company Tata Elxsi is a medium-sized IT firm well-known for its design and engineering capabilities.

The board of directors of the company has recommended a final dividend of Rs 60.6 per equity share to the shareholders. The payout translates to 606% per cent against the face value of Re 10 per equity share. The record date for the same will be announced after the conclusion of the 34th Annual General Meeting.

In the last five years, Tata Elxsi has consistently made dividend payments. It has declared a total of 23 dividends since 2001.

The five-year average dividend payout ratio stands at 45.4%. The dividend yield over the past five years has averaged 1.5%.

Tata Elxsi's Dividend History (2018-2022)

  Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
Dividend per share (Adj.) * (Rs) 11 13.5 16.5 48 42.5
Dividend payout ratio (%) 28.5 29 40.1 81.2 48.2
Dividend Yield (%) 0.8 1.2 2.1 2.6 0.7
*Adjusted for bonus issues and stock splits
Data source: Equitymaster

Considering the growing importance of AI in various industries, Tata Elxsi plans to enhance its AI offerings.

Given Tata Elxsi's involvement in the automotive industry, it plans to focus on AI applications for autonomous driving, advanced driver assistance systems (ADAS), and connected car technologies.

The company has a strong presence in the AI sector, focusing on developing AI-powered solutions for the automotive industry. The company's AI solutions cover various applications, including autonomous driving, advanced driver assistance systems, and connected vehicles.

For more details, see the Tata elxsi company fact sheet and quarterly results.

#3 Cyient

Third, on the list is Cyient.

Formerly Infotech Enterprises, Cyient has come a long way. From humble beginnings as a GIS data conversion vendor, this company has transformed into a formidable engineering player operating in critical sectors such as aerospace, defence, communications, and utilities.

While Cyient is not exclusively an AI-focused company, it leverages AI and other cutting-edge technologies to enhance its service offerings and improve operational efficiency.

One area where Cyient has applied AI is in its geospatial services. By leveraging AI algorithms, the company can analyse and process large volumes of geospatial data more efficiently.

For the financial year 2023, the company has declared a dividend of Rs 16 or 320% on the face value of Rs 5 per share.

The record date for the same is 12 June 2023.

The company has maintained a good record of dividends and consistently declared dividends for the last five years. Since 2000, the company has declared 37 dividends.

The five-year average dividend payout ratio stands at 48.2%. The dividend yield over the past five years has averaged 7.5%.

Cyient's Dividend History (2019-2023)

  Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Dividend per share (Adj.) * (Rs) 14.9 14.9 16.9 23.9 25.9
Dividend payout ratio (%) 34.8 48 51.4 50.7 55.9
Dividend Yield (%) 2.3 6.5 2.6 2.6 2.6
*Adjusted for bonus issues and stock splits
Data source: Equitymaster

Going forward, Cyient plans to expand its AI capabilities in data analytics and machine learning. By harnessing the power of AI algorithms and advanced analytics, Cyient aims to gain deeper insights from the vast amounts of data it handles, enabling better decision-making.

For more details, see the Cyient company fact sheet and quarterly results.

#4 Persistent Systems

Fourth on the list is Persistent Systems.

The company has an edge in cloud-native application development, analytics and AI, cloud engineering, migrations and managed services. It has been awarded and highly recognised for its analysis and AI capabilities.

Persistent Systems has a dedicated AI and ML (Machine Learning) practice that focuses on developing AI-driven solutions for clients. The company's expertise in AI encompasses natural language processing, computer vision, predictive analytics, and cognitive computing.

For industrial applications, Persistent Systems applies AI in areas such as healthcare, financial services, manufacturing, and retail.

For the financial year 2023, the board has declared a final dividend of Rs 12 per share and a special dividend of Rs 10 per share on the face value of Rs 10 per share.

The said dividends will be paid on or before 30 September 2023.

Persistent Systems has remained a consistent dividend payer. Since 2010, the company has declared 28 dividends.

The five-year average dividend payout ratio stands at 28.9%. The dividend yield over the past five years has averaged 1.5%.

Persistent Systems' Dividend History (2018-2022)

  Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
Dividend per share (Adj.) * (Rs) 10.4 11.3 11.9 19.8 30.8
Dividend payout ratio (%) 24.8 24.7 27 33.9 34.3
Dividend Yield (%) 1.4 1.5 2.1 1.6 0.9
*Adjusted for bonus issues and stock splits
Data source: Equitymaster

Moving forward, the company plans to increase its reach in the AI space by exploring new areas.

For more details, see the Persistent Systems company fact sheet and quarterly results.

#5 Zensar Technologies

Last on the list is Zensar Technologies.

Zensar Technologies is a global information technology services and consulting company based in India.

The company has been investing in AI research and development to enhance its service capabilities.

It has applied AI across various industries, including banking and financial services, healthcare, manufacturing, and retail. The company's AI-driven solutions encompass customer experience management, fraud detection and prevention, and supply chain optimisation.

The board of directors of Zensar Technologies has approved the recommendation of a final dividend of Rs 3.5 (175%) per equity share of Rs 2 each for the financial year 2022-23. The record date for the same will be declared after the approval in the latest AGM.

With a good history of dividend payouts, the company has declared 33 dividends since 2002.

The five-year average dividend payout ratio stands at 20.1%. The dividend yield over the past five years has averaged 1%.

Zensar Technologies' Dividend History (2018-2022)

  Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
Dividend per share (Adj.) * (Rs) 0.5 2.8 2.8 3.6 4.9
Dividend payout ratio (%) 4.4 19.8 23.2 26.5 26.8
Dividend Yield (%) 0.3 0.3 1.7 1.7 1.2
*Adjusted for bonus issues and stock splits
Data source: Equitymaster

Going forward, the company plans to pivot from digital space towards disruptive AI. It plans to set the platform for seven areas including sales, marketing, IT, talent supply chain and three more.

For more details, see the Zensar Technologies company fact sheet and quarterly results.

Should you invest in dividend paying AI stocks?

AI represents one of the biggest paradigm shifts in our society. For investors, it provides a rare opportunity to latch onto a fast-growing industry with plenty of upside.

Investing in dividend-paying AI stocks can be an attractive option for investors. Dividends provide a steady stream of income, allowing investors to earn passive returns on their investment.

Additionally, investing in AI stocks allows you to benefit from the growth and potential of the AI industry, which has seen significant advancements and widespread adoption.

Investing in futuristic AI dividend stocks represents a good opportunity for long-term investment. AI technologies are expected to continue advancing and disrupting industries for years to come, offering sustained growth and income opportunities for investors.

However, as with any investment, it's important to conduct thorough research and analysis before making investment decisions.

Investors should navigate this emerging landscape carefully to avoid the pitfalls that often plague emerging sectors.

If you want to dig deeper, use Equitymaster's stock screener to check high dividend yield stocks and the best dividend stocks to buy.

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

Safe Stocks to Ride India's Lithium Megatrend

Lithium is the new oil. It is the key component of electric batteries.

There is a huge demand for electric batteries coming from the EV industry, large data centres, telecom companies, railways, power grid companies, and many other places.

So, in the coming years and decades, we could possibly see a sharp rally in the stocks of electric battery making companies.

If you're an investor, then you simply cannot ignore this opportunity.

Click Here for Full Details

Details of our SEBI Research Analyst registration are mentioned on our website - www.equitymaster.com

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...


FAQs

Which are the top dividend yield stocks in India right now?

As per Equitymaster's Stock Screener, these are the top dividend yield stocks in India right now.

These largecap companies are ranked as per their dividend yield. A higher yield is more attractive, while a lower yield can make a stock seem less competitive relative to its industry.

Of course, there are other parameters you should take into account as well before forming a hard opinion on the stock.

What is the dividend yield of a company and how is it calculated?

The dividend yield of a company is a financial ratio that measures the quantum of cash dividends paid out to shareholders relative to the market value per share.

It is calculated by dividing the annual dividend per share by the market price of the share.

Dividend Yield = 100% * (annual dividend per share/market price per share)

It is often expressed as a percentage of the market price of the share.

Here's an example...Suppose company X's stock price is Rs 300 and the company's dividend per share is Rs 10. Using the above formula, the dividend yield of a company is 3.3%.

This means that for every Rs 100 invested in the share, investors earn a dividend of Rs 3.3.

What kind of companies pay high dividends?

A company can do two things with the profits that it earns - It can either plough the profits back into the company for investing in capex, new products or distribution or pay out the amount as dividend and become a dividend stock.

As such, dividend payout depends a lot on the cash (after meeting its capital expenditure and working capital requirements) a company generates during a year.

Often companies do not need to reinvest into the business purely because they don't see the need for it.

A classic example would be of companies from the FMCG sector. The FMCG sector is a slow yet steady growing industry. But yet, companies choose to pay out huge dividends due to the sector's slow growing nature as capex requirements are on the lower side.

As against this commodity businesses like cement, steel, textile or even capital goods and telecom businesses need to constantly reinvest cash. This leaves very little on the table to pay to shareholders by way of dividends.

Equitymaster requests your view! Post a comment on "Top 5 AI Stocks Which Pay Good Dividends". Click here!

1 Responses to "Top 5 AI Stocks Which Pay Good Dividends"

HARSHIL UDANI

Jun 6, 2023

Dear Team,

thankyou for superb information. really it means a lot.

Like 
  
Equitymaster requests your view! Post a comment on "Top 5 AI Stocks Which Pay Good Dividends". Click here!