Dividends are cash payout to shareholders out of profits of the company. While investing in equity is at high risk, if one can invest in stocks that provide consistent dividends + share price appreciation, it would be the double win situation. Do you know that there are stocks that are paying dividends, which are higher than bank fixed deposit rates? In this article, we would provide 4 Stocks Paying Dividends which are higher than fixed deposit interest rates in 2023.
What is Dividend?
The dividend is the cash payout made to shareholders of the company. These payouts are done out of the profits earned by the company. Dividend paid is indicated as a percentage of the face value of the share. As an example, company shares have a face value of ₹ 10 and declares ₹ 2 dividend, it is indicated as 20% dividend.
However, in reality the dividend earned is computed based on the current market price of the shares. If we continue above example, assume that such shares are trading at ₹ 20 per share in the market and dividend is ₹ 2, then dividend yield is 20/2=5%. The higher the dividend yield, there could be a higher regular flow of income to the shareholders.
How we filtered dividend paying stocks higher than bank FD rates?
We have taken entire universe of stocks that are paying dividends.
Filtered where market cap is > 1,000 crores. This is to avoid small companies paying high dividends for some reasons.
Further filtered stocks that are paying over 7%.
We have also filtered stocks which generated share price appreciation in the last 1 year and last 3 years. This is just to ensure that the capital is not eroded while one is looking at dividends as regular income.
We could get 4 stocks that are paying dividends between 7.5% to 10.2% per annum. The share prices also increased between 7% to 96% beyond the dividend income.
The data is as on 12-Feb-23 (Sunday).
4 Stocks Paying Dividends Higher than FD Rates
#1 – REC Ltd – Dividend Yield – 9.81%
#2 – Coal India – Dividend Yield – 9.57%
#3 – Banco Products – Dividend Yield – 9.3%
#4 – H U D C O – Dividend Yield – 7.5%
Stocks Paying Higher Dividends – Detailed View
#1 – REC Ltd – CMP ₹ 117
REC Limited, formerly Rural Electrification Corporation Limited is a subsidiary of Power Finance Corporation Limited which in turn is under the ownership of the Ministry of Power, Government of India. It finances and promotes power projects across India
Financial Performance of the company
Company revenues have grown from ₹ 22,651 Crores in FY18 to ₹ 39,269 Crores in FY22.
Company profits grew from ₹ 4,439 Crores in FY18 to ₹ 10,047 Crores in FY22.
Current Dividend Yield – 9.8%
Stock Price Performance
Last 1 year returns – 10.7%
Last 3 year absolute returns – 2%
#2 – Coal India – CMP ₹ 211
Coal India Ltd is the largest coal producing company in the world. The company also produces non-coking coal and coking coal of various grades for diverse applications
Financial Performance of the company
Company revenues have grown from ₹ 85,862 Crores in FY18 to ₹ 109,713 Crores in FY22.
Company profits grew from ₹ 7,019 Crores in FY18 to ₹ 17,387 Crores in FY22.
Current Dividend Yield – 9.5%
Stock Price Performance
Last 1 year returns – 26%
Last 3 year absolute returns – 18%
#3 – Banco Products – CMP ₹ 215
Banco Products (India) Ltd is engaged in the manufacture of high quality engine cooling components and engine sealing gaskets to the automobile.
Financial Performance of the company
Company revenues have grown from ₹ 1,335 Crores in FY18 to ₹ 1,958 Crores in FY22.
Company profits grew from ₹ 113 Crores in FY18 to ₹ 152 Crores in FY22.
Current Dividend Yield – 9.3%
Stock Price Performance
Last 1 year returns – 29%
Last 3 year absolute returns – 113%
#4 – H U D C O – CMP ₹ 47
Housing and Urban Development Corporation, Ltd. (HUDCO) provides housing and utility infrastructure services in India.
Financial Performance of the company
Company revenues have grown from ₹ 4,171 Crores in FY18 to ₹ 6,954 Crores in FY22.
Company profits grew from ₹ 1,010 Crores in FY18 to ₹ 1,716 Crores in FY22.
Current Dividend Yield – 7.5%
Stock Price Performance
Last 1 year returns – 16%
Last 3 year absolute returns – 25%
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Very Good Information. Thanks..
Good article. Also check IOC, PFC, Vedanta and NTPC
IOC and Vedanta – Stock price fallen in the last 1 to 5 years
PFC was < 7.5% dividend yield as on the date of writing the article NTPC - 4.2% dividend, hence not covered
div yield is hardly useful anymore because of taxation, ditto with FDs too, if you are in high Tax bracket
What about NALCO and NHPC? They are as well giving good Dividend yield. And HUDCo, Is it a good share to buy. It is hovering around 40 for past 5 years.
Nalco – 8.22% dividend yield – However last 1 year stock price fallen by 35%
NHPC – 4.44% dividend yield only
Hence these 2 are not figuring in our list
Thanks for the update