Which are the Highest-Paying Dividend Stocks in the BSE Smallcap Index?

Investing in the stock market often feels like riding a wave-its direction can shift unexpectedly from day to day. While the long-term trend may lean upward, the journey is rarely smooth, with market corrections and crashes cropping up, often without warning.

Currently, Indian markets face challenges such as high valuations, a slowdown in earnings growth, rising yields, and a weakening rupee.

In these uncertain times, investors often seek stability, turning to dividend stocks that offer a consistent income stream, even during volatility.

Building a resilient stock portfolio is essential to weathering downturns. Dividend-paying stocks, known for holding their value during challenging periods, can play a crucial role in such strategies.

In this article, we explore the top dividend-paying stocks from the BSE Smallcap Index, ranked by their dividend yield, to help you identify reliable investment options.

#1 Xchanging Solutions

First on the list is Xchanging Solutions.

Trading at Rs 112 on 27 December 2024, Xchanging Solutions leads the BSE Smallcap list with a dividend yield of 15.1%. This makes it one of the most attractive stocks for dividend-focused investors.

The company has declared four dividends since July 2023. For FY24, it announced two interim dividends of Rs 15 each, followed by a final dividend and a special dividend of Rs 2 each. This brought the total dividend payout for the year to Rs 34 per share.

The significant dividend yield underscores the company's strong financial position and its focus on creating value for its investors.

Xchanging Solutions, founded in 2001, is a prominent player in the technology and business process outsourcing (BPO) industry, primarily serving the insurance and financial sectors. The company has been recognised for its innovative solutions that streamline operations and reduce costs.

Going forward, the company plans to enhance customer satisfaction and service quality.

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

#2 Chennai Petroleum Corporation

Next on the list is Chennai Petroleum Corporation.

With the company's shares trading at Rs 607 as of 27 December 2024, it has a dividend yield of 9.1%.

The dividend yield peaked at 11.3% during the financial year 2023.

Chennai Petroleum Corporation Dividend History (2020-24)

	20-Mar	21-Mar	22-Mar	23-Mar	24-Mar
Dividend per share (Adj.) (Rs)	-		2	27	55
Dividend payout ratio (%)	-	-	2.2	11.4	29.8
Dividend Yield (%)	-	-	1.6	11.3	6.1

Data Source: Equitymaster

The company has started paying consistent dividends three years ago.

Since 2000, Chennai Petroleum Corporation has declared a total of 19 dividends. Over the last 12 months, the company announced an equity dividend of Rs 55 per share.

The company, originally established in 1965 as Madras Refineries Limited (MRL), began as a joint venture involving the Government of India, Amoco, and the National Iranian Oil Company (NIOC).

In 2001, CPCL became a subsidiary of Indian Oil Corporation (IOCL), enhancing its position in India's oil and gas sector.

In collaboration with IOCL, CPCL is currently undertaking the installation of a 9 MMTPA grassroots refinery project in Nagapattinam, Tamil Nadu. The project, with an estimated investment of Rs 315.8 billion, will strengthen CPCL's capacity and contribute to the country's energy infrastructure.

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

#3 DB Corp

Next on the list is DB Corp.

Trading at Rs 303 on 27 December 2024, DB Corp has a dividend yield of 6.6%. The company has been a consistent dividend payer since 2010.

Over the past five years, the company's dividend yield peaked at an impressive 12.6% in FY20.

DB Corp Dividend History (2020-2024)

	20-Mar	21-Mar	22-Mar	23-Mar	24-Mar
Dividend per share (Adj.) * (Rs)	9.8	2.9	4.9	6	12.9
Dividend payout ratio (%)	63.6	37.1	62.1	63.2	54.4
Dividend Yield (%)	12.6	3.3	5.9	6.2	5

*Adjusted for bonus issues and stock splits
Source: Equitymaster

Over the past 5 years, the company has maintained an average dividend yield of 6.6%. It has declared 32 dividends since 2010.

In the past 12 months, the company has announced an equity dividend of Rs 20 per share.

DB Corp Limited is a leading India-based print media company involved in the sale of newspapers and magazines and generating significant advertisement revenue.

The company has also expanded its presence into the radio and digital sectors, diversifying its business operations.

Looking ahead, DB Corp aims to continue delivering high-quality journalism, with a particular focus on enhancing its digital platforms to cater to the evolving preferences of its audience.

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

#4 Jagran Prakashan

Next on the list is Jagran Prakashan.

With Jagran Prakashan's share price at Rs 83.3, the stock has a dividend yield of 6%.

In the past 12 months, the company has declared an equity dividend amounting to Rs 5 per share.

Jagran Prakashan Dividend History (2020-2024)

	20-Mar	21-Mar	22-Mar	23-Mar	24-Mar
Dividend per share (Adj.) * (Rs)	-	-	-	4	5
Dividend payout ratio (%)	-	-	-	44.2	66
Dividend Yield (%)	-	-	-	5.6	4.9

*Adjusted for bonus issues and stock splits
Source: Equitymaster

The company has paid a dividend twice in past five years. The company has declared 17 dividends since 2007.

Jagran Prakashan is one of India's largest media conglomerates, best known for its flagship Hindi newspaper, Dainik Jagran. The company has expanded its operations to include radio (Radio City), digital media, and event management, allowing it to engage diverse audiences across platforms.

Going forward, the company is dedicated to upholding high journalistic standards and conducting community initiatives to promote literacy and education throughout India.

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

#5 Nirlon

Last on the list is Nirlon.

Currently trading at Rs 451, the stock has a dividend yield of 5.8%.

Nirlon Dividend History (2020-2024)

	20-Mar	21-Mar	22-Mar	23-Mar	24-Mar
Dividend per share (Adj.) * (Rs)	0.8	8	26	26	26
Dividend payout ratio (%)	6.2	56.6	211.5	148.4	114
Dividend Yield (%)	0.3	2.9	6.3	6.9	6.1

*Adjusted for bonus issues and stock splits
Source: Equitymaster

Over the past five years, the company has maintained an average dividend yield of 4.5%, providing steady income to investors.

The company has an impressive five-year average dividend payout ratio of 107.3%. Since 2002, Nirlon has declared 15 dividends.

In FY24, the company declared an equity dividend of Rs 26 per share.

Nirlon is a prominent Indian company specialising in the development and management of industrial and IT parks, most notably the Nirlon Knowledge Park in Goregaon, Mumbai.

Transitioning from its origins as a synthetic yarn manufacturer, the company underwent bankruptcy restructuring between 1988 and 2006.

Today, it focuses on real estate development and leasing services tailored to corporate clients.

Looking ahead, Nirlon plans to enhance its operations and further expand its offerings, solidifying its position in the real estate and the IT parks sector.

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

Conclusion

Dividend-paying smallcap stocks can offer a compelling investment opportunity, but they come with a mix of advantages and risks that investors should carefully weigh.

On one hand, these stocks provide a steady income stream through dividends, offering a cushion during volatile market periods.

This can be especially appealing in the context of uncertain economic conditions, where the consistency of dividend payouts can act as a safety net.

Furthermore, many small companies with a strong dividend history often exhibit sound fundamentals and a commitment to shareholder value.

However, small-cap stocks are generally more volatile and can be sensitive to economic downturns, making their dividend sustainability a potential concern.

Unlike largecaps, these companies may have limited resources to weather prolonged financial stress, which could impact their ability to maintain consistent payouts.

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

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...