There are many companies that are rewarding investors with share price appreciation. However, such returns are not fixed and fluctuating. Do you know there are some companies that are paying high dividends and yield is between 6% to 10%. Means if you invest Rs 5 Lakhs, you would get up to 50,000 per year as dividend beyond share price appreciation. Which are the Top 10 Dividend Yield Stocks to invest in 2022 in India? Is it safe to invest in these high dividend yield stocks?
What are dividends?
Companies would declare dividends to its shareholders out of the profits earned by them. While such dividends are not fixed, this is like an extra income for the investors. In some cases, companies declare dividends even without generating profits in that year.
Dividend payout computation is done based on face value of the share price. E.g. Company X Limited shares have a face value of Rs 10. It has declared a Rs 5 dividend per share. In such case dividend payout ratio is = 5/10 = 50%. However, this would not show the true picture about actual returns on the investments. Here comes dividend yield.
Dividend yield is computed based on the dividends paid vs. share price of the company at any point of time. Let me explain with an example
e.g. Hinduja Global declared dividend of Rs 28 per share on 14-Feb-22. Its shares were trading at Rs 1,236. The dividend yield is approx. 2.2% (dividend paid / share price as of that date). The company has paid Rs 217 towards dividends at various dates in FY21-22 and the dividend payout ratio is 10.1%.
Hence, investors should worry about dividend yield rather than dividend payout.
Top 10 Dividend Yield Stocks to invest in 2022 in India
Here is the list of the Top 10 stocks which are paying highest dividends in India.
#1 – Hinduja Global – 10.1%
#2 – REC Limited – 9.7%
#3 – IOCL – 9.3%
#4 – Power Finance Corp – 9%
#5 – NMDC – 8.8%
#6 – Coal India – 8.6%
#7 – Allsec Tech – 8.5%
#8 – PTC India – 7.9%
#9 – SAIL – 6.1%
#10 – Hudco – 6%
If you observe, the majority of these companies are PSUs who are paying such high dividends.
10 Best Dividend Yield Stocks for 2022 – Company details, payout and Yield
#1 – Hinduja Global – CMP Rs 1,098
Hinduja Global Solutions Limited is engaged in the business of business process management. It offers voice and non-voice based services such as contact center solutions and back office transaction processing across the globe.
Dividend yield for last year is 10.1%
Dividend payout on FV of share is 25% (FY21), 21% (FY20) and 12% (FY19).
Share Price Performance – 1 Year – 27% and 3 years – 238%.
Recently it concluded the sale of its healthcare services business for US$ 1.2 Bn (approx. INR. 8,940 Cr) to BPEA.
#2 – REC Limited – CMP Rs 130
REC Limited is a Central Public Sector Undertaking under the Ministry of Power involved in financing projects in the complete power sector value chain from generation to distribution.
Dividend yield for last year is 9.74%
Dividend payout on FV of share is 30% (FY21), 44% (FY20) and 38% (FY19).
Share Price Performance – 1 Year – 1% and 3 years – minus 15%
#3 – Indian Oil Corporation (IOCL) – CMP Rs 128
Indian Oil Corporation Limited (a Maharatna Company controlled by GOI that has business interests straddling the entire hydrocarbon value chain – from Refining, Pipeline transportation and marketing of Petroleum products to R&D, Exploration & production, marketing of natural gas and petrochemicals. It has the leadership position in the Oil refining & the petroleum marketing sector of India.
Dividend yield for last year is 9.3%.
Dividend payout on FV of share is 51% (FY21), 0% (FY20) and 49% (FY19).
Share Price Performance – 1 Year – 44% and 3 years – minus 17%.
#4 – Power Finance Corporation (PFC)– CMP Rs 118
Power Finance Corporation Limited is a Systemically Important Non-Deposit taking NBFC registered with the RBI as an Infrastructure Finance Company. It is engaged in extending financial assistance to the Indian power sector.
Dividend yield for last year is 9%
Dividend payout on FV of share is 22% (FY21), 35% (FY20) and 0% (FY19).
Share Price Performance – 1 Year – 7.5% and 3 years – minus 2%.
#5 – NMDC – CMP Rs 168
NMDC is engaged in exploration and production of Iron Ore along with Diamond, production and sale of Sponge Iron and generation and sale of Wind Power.
Dividend yield for last year is 8.8%
Dividend payout on FV of share is 36% (FY21), 45% (FY20) and 37% (FY19).
Share Price Performance – 1 Year – 21% and 3 years – 61%.
#6 – Coal India – CMP Rs 187
Coal India Limited is mainly engaged in mining and production of Coal and also operates Coal washeries. The major consumers of the company are power and steel sectors. Consumers from other sectors include cement, fertilizers, brick kilns etc.
Dividend yield for last year is 8.6%
Dividend payout on FV of share is 78% (FY21), 44% (FY20) and 46% (FY19).
Share Price Performance – 1 Year – 46% and 3 years – minus 22%.
#7 – Allsec Tech – CMP Rs 528
Allsec Tech Limited is a global leader in outsourcing solutions offering a future-ready, resilient business transformation services to industry heavyweights, Fortune 100 companies, and growth-focused organizations. The services provided by the Company include data verification, processing of orders received through telephone calls, telemarketing, monitoring quality of calls of other call centers, customer services and HR and payroll processing. The Company has delivery centers in Chennai, Bengaluru and NCR.
Dividend yield for last year is 8.5%.
Dividend payout on FV of share is 65% (FY21), 0% (FY20) and 97% (FY19).
Share Price Performance – 1 Year – 63% and 3 years – 79%.
#8 – PTC India – CMP Rs 94.8
PTC India Limited established in 1999 by the Government of India as a Public-Private Initiative and is in the power trading business. It is promoted by Power Grid Corporation of India Limited (PGCIL), NTPC Limited (NTPC), Power Finance Corporation Limited (PFC) and NHPC Limited (NHPC).
Dividend yield for last year is 7.9%
Dividend payout on FV of share is 49% (FY21), 44% (FY20) and 28% (FY19).
Share Price Performance – 1 Year 12% and 3 years 30%.
#9 – SAIL – CMP Rs 106
Steel Authority of India Limited (SAIL) is one of the largest steel-making companies in India and one of the Maharatnas of the country’s Central Public Sector Enterprises. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials. SAIL manufactures and sells a broad range of steel products.
Dividend yield for last year is 6.1%.
Dividend payout on FV of share is 28% (FY21), 0% (FY20) and 9% (FY19).
Share Price Performance – 1 Year 17% and 3 years 87%.
#10 – Hudco – CMP Rs 36.2
Housing & Urban Development Corporation Ltd is primarily engaged in the business of financing housing and urban development activities in the country
Dividend yield for last year is 6%
Dividend payout on FV of share is 28% (FY21), 36% (FY20) and 14% (FY19).
Share Price Performance – 1 Year – minus 14% and 3 years – minus 18%.
Is it safe to invest in these high dividend yield stocks?
One should keep below pointers in mind before investing in these high dividend yield stocks.
1) Though these companies are paying consistent dividends, these are not guaranteed.
2) Majority of these companies are PSUs. The main motto for them is to provide some income to Govt of India. In case these are privatized, the dividend income might reduce. However, in case of privatization, there are greater chances that the share prices would increase.
3) Share price performance of these companies is very low. Many such companies’ share prices have fallen in the last 1 to 3 years. If your goal is to have high dividends + increase in share prices too, invest in consistent performers in these two areas.
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