Last Updated on Jun 4, 2024 by Anjali Chourasiya
Investing in dividend-paying stocks is a popular strategy among investors looking to secure a steady income while benefiting from potential capital appreciation. In the Indian stock market, several companies stand out for their consistent and attractive dividend payouts, offering investors a reliable source of passive income. Whether you are a seasoned investor or a newcomer exploring opportunities to grow your wealth, understanding the best highest dividend-paying stocks in India can help you make informed decisions and maximise your investment returns. In this article, we will delve into the top dividend-paying stocks in India, factors to consider before investing, advantages, risks, and more.
Table of Contents
Best Highest Dividend-Paying Stocks in India in 2024
| Name | Sub-Sector | Market Cap | Close Price | PE Ratio | Dividend Yield |
| Coal India Ltd | Mining – Coal | 308,752.69 | 512.35 | 8.25 | 5.09 |
| Oil and Natural Gas Corporation Ltd | Oil & Gas – Exploration & Production | 356,336.41 | 284.10 | 7.24 | 4.32 |
| HCL Technologies Ltd | IT Services & Consulting | 364,278.88 | 1,314.45 | 23.20 | 3.87 |
| Power Grid Corporation of India Ltd | Power Transmission & Distribution | 296,503.25 | 337.65 | 19.04 | 3.53 |
| Bharat Petroleum Corporation Ltd | Oil & Gas – Refining & Marketing | 141,890.82 | 666.15 | 5.28 | 3.15 |
| Infosys Ltd | IT Services & Consulting | 606,591.74 | 1,405.90 | 23.12 | 3.14 |
| ITC Ltd | FMCG – Tobacco | 544,583.55 | 430.35 | 26.62 | 3.14 |
Note: We have used the Tickertape Stock Screener to get the best dividend-paying stocks in India. The information is dated 3rd June 2024 and is based on the following parameters:
- Stock Universe: Nifty 50
- Dividend Yield: High – Sort from highest to lowest
🚀 Pro Tip: Utilise Tickertape’s Historical Performance feature to analyse the past performance of stocks over different time periods. This feature allows you to assess long-term trends and make better investment choices.
A Brief on the Filters Used To Discover the Best Highest Dividend-Paying Stocks in India
Dividend Yield: The ratio is calculated as dividend per share (DPS) for the most recent fiscal year divided by the close price of the stock. A dividend is a portion of the company’s profit paid to shareholders. Dividend per share (DPS) refers to the total dividend paid out divided by the company’s common stock.
The ratio is used to calculate the earnings on investment, considering only dividends declared. The higher the dividend yield, the better.
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Discover the convenience of investing in highest dividend paying stocks through ready-made portfolios curated by SEBI-registered experts.
Before diving in, let’s understand what smallcase is.
smallcases are modern investment products that help investors build low-cost, long-term & diversified portfolios with ease. A smallcase is a basket or portfolio of stocks/ETFs representing an idea – an objective, theme, or strategy. They are created and managed by SEBI-registered experts.
Among 500+ smallcases, here’s the top smallcases you can check out:
Note: These smallcases are mentioned only for educational purposes and are not meant to be recommendatory. Investors must conduct their own research and consult a financial expert before making any investment decisions.
Disclosure for mentioned smallcases.
Overview of the Highest Dividend Paying Stocks in India
Founded in November 1975, Coal India Ltd is the largest coal-producing company in the world and operates under the Ministry of Coal, Government of India. The company is responsible for approximately 83% of India’s coal production.
The company, as of 3rd June 2024, had a market capitalisation of Rs. 3,08,752.68 cr. and a stock price of Rs. 574.7. Coal India Ltd’s 1-yr return is 123.05%, and the net profit margin is 24.81%. Coal India has a strong dividend payout history with current dividend yield of 5.08%, making it one of the top dividend-paying stocks in India.
Oil and Natural Gas Corporation Ltd
Established on 14th August 1956, Oil and Natural Gas Corporation Ltd (ONGC) is a multinational oil and gas company owned by the Government of India and is the largest oil and gas exploration and production company in the country. ONGC contributes around 70% to India’s domestic production of crude oil and natural gas.
The company, as of 3rd June 2024, had a market capitalisation of Rs. 3,56,336.40 cr. and a stock price of Rs. 7,143.05. Oil and Natural Gas Corporation Ltd’s 1-yr return is 82.81%, and the net profit margin is 7.48%. The stock’s dividend yield is 4.32%.
Founded on 11th August 1976, by Shiv Nadar, HCL Technologies Ltd is a leading global IT services company that offers software development, business process outsourcing, and IT infrastructure management services.
As of 3rd June 2024, the company’s market capitalisation is Rs. 3,64,278.88cr. and a stock price of Rs. 99.5. HCL Technologies Ltd’s 1-yr return is 15.47%, and the net profit margin is 14.09%. The stock’s dividend yield is 3.87%.
Power Grid Corporation of India Ltd
Power Grid Corporation of India Ltd was incorporated on 23rd October 1989. It is a state-owned electric utility company responsible for power transmission across India, operating a vast network of transmission lines and substations. Headquartered in Gurugram, Haryana, Power Grid plays a crucial role in ensuring the reliable supply of electricity.
As of 3rd June 2024, the company’s market capitalisation is Rs. 2,96,503.24 cr. and a stock price of Rs. 1,914.95. Power Grid Corporation of India Ltd’s 1-yr return is 91.08%, and the net profit margin is 33.19%. The stock’s dividend yield is 3.52%.
Bharat Petroleum Corporation Ltd
Founded in 1952, Bharat Petroleum Corporation Ltd (BPCL) is a government-controlled oil and gas company involved in refining, marketing, and distribution of petroleum products. The company, as of 3rd June 2024, had a market capitalisation of Rs. 1,41,890.82 cr. and a stock price of Rs. 28,901.05. Bharat Petroleum Corporation Ltd’s 1-yr return is 86.70%, and the net profit margin is 5.95%. The stock’s dividend yield is 3.15%.
Infosys Ltd was founded on 2nd July 1981, by N.R. Narayana Murthy and six other engineers. It is a multinational corporation providing consulting, technology, and outsourcing services. Infosys is one of the largest IT companies in India. The company has a reputation for innovation and growth.
The company, as of 3rd June 2024, had a market capitalisation of Rs. 6,06,591.73 cr. and a stock price of Rs. 3,430.35. Infosys Ltd’s 1-yr return is 7.77%, and the net profit margin is 16.56%. The stock’s dividend yield is 3.13%.
ITC Ltd was established on 24th August 1910, as the Imperial Tobacco Company of India Limited. It is a diversified conglomerate with interests in FMCG, hotels, paperboards, packaging, agri-business, and information technology. Headquartered in Kolkata, West Bengal, ITC is known for its strong brand portfolio and market presence.
On 3rd June 2024, the company’s market capitalisation was Rs. 5,44,583.55 cr. and a stock price of Rs. 283.55. ITC Ltd’s 1-yr return is -2.33%, and the net profit margin is 27.79%. The stock’s dividend yield is 3.13%.
Factors to Consider When Investing in the Highest Dividend-Paying Stocks
- Yield Ratio: A high yield ratio indicates that the company is reinvesting very little amount back into the business and paying more to the shareholders. Hence, always do a deeper analysis of the company’s financials before investing.
- Risk: High dividend-paying stocks are usually considered safer than other growth stocks. The reason behind this is when there is a sudden market crash or decline, high dividend-paying stocks do not lose their value. These stocks also help in diversifying the risk potential. However, consider your risk appetite before investing.
- Fundamentals: Investing in a company because of a high dividend payout can be fatal for your portfolio in the long run. Hence, it is wise to analyse the company for its fundamentals instead of looking at a high dividend yield.
Benefits of Investing in High Dividend Yield Stocks
Investing in high dividend yield stocks can offer several significant advantages. These stocks, typically issued by well-established companies with a history of stable earnings, can be a strategic addition to any investment portfolio. Here are some key benefits of investing in stocks that pay dividends:
- Source of Passive Income:
High dividend yield stocks provide a consistent and reliable source of income through regular dividend payments. This can be especially beneficial for retirees or those looking to supplement their income without having to sell their investments. Dividend payments often reflect a company’s financial health and stability, as only profitable companies can afford to pay regular dividends. - Dividend Reinvestment:
Dividends received from high-yield stocks can be reinvested to purchase additional shares. This reinvestment process, often facilitated through Dividend Reinvestment Plans (DRIPs), can lead to compound growth over time, significantly increasing the value of your investment. Reinvesting dividends allows investors to benefit from dollar-cost averaging, which involves buying more shares when prices are low and fewer when prices are high, thus reducing the average cost per share over time. - Lower Risk Compared to Other Stocks:
Companies that pay high dividends are often well-established with a solid track record of profitability and stability. These firms tend to have more predictable earnings and are less likely to experience drastic downturns, making their stocks less risky compared to non-dividend-paying stocks. During economic downturns, high dividend stocks tend to hold their value better than growth stocks, which might not pay any dividends and rely solely on capital appreciation. - Less Prone to Market Volatility:
High dividend yield stocks generally exhibit lower price volatility compared to growth stocks. This is because the regular income from dividends provides a cushion during market fluctuations, helping to stabilise the stock price. Regular dividend payments can boost investor confidence, as they are indicative of a company’s ongoing profitability and financial health. This confidence can lead to more stable demand for these stocks, thereby reducing price volatility.
Risks of Investing in High Dividend Yield Stocks
Here are a few risks of investing in high dividend yield stocks:
- Dividend Cuts or Suspensions:
Companies that face financial difficulties may cut or suspend their dividend payments. High dividend yields can sometimes be a signal that the company is under financial stress, as the yield rises when the stock price falls. This can lead to a loss of expected income and negatively impact the stock’s value. - Interest Rate Sensitivity:
High dividend yield stocks can be sensitive to changes in interest rates. When interest rates rise, these stocks may become less attractive compared to bonds and other fixed-income securities, leading to a decline in their stock prices. Investors may shift their investments to higher-yielding, safer alternatives. - Limited Growth Potential:
Companies that pay high dividends may reinvest less of their earnings back into the business. This can limit their growth potential compared to companies that reinvest more in their operations and expansion. Consequently, investors might miss out on capital gains associated with high-growth companies. - Sector Concentration:
High dividend yield stocks are often concentrated in specific sectors, such as utilities, real estate, and consumer staples. This lack of diversification can expose investors to sector-specific risks. Economic or regulatory changes affecting these sectors can significantly impact the performance of high dividend yield stocks.
How to Invest in the Best Dividend Paying Stocks in India?
When considering investments in high dividend stocks in India for 2024, it is prudent to evaluate several key factors. Here are some criteria that may be helpful in identifying the highest dividend-paying stocks in India:
1. Consistency in Dividend Payments
Consistency can be an important factor when evaluating dividend-paying stocks. Companies with a long history of maintaining or increasing dividend payments may suggest stability. Observing stocks that have offered stable or growing dividends over the last 10 years could be beneficial. This consistency might indicate strong financial health and a potential commitment to returning profits to shareholders.
2. Dividend Yield and Payout Ratio
Dividend yield is a significant metric that indicates how much a company pays out in dividends each year relative to its stock price. High dividend yield stocks might provide substantial income. However, it may be advisable to balance high yields with sustainability considerations. The payout ratio, which shows the percentage of earnings paid out as dividends, is also worth examining. A very high payout ratio might indicate potential risk if the company’s earnings decline.
3. Company Financial Health
Assessing the company’s overall financial health could be crucial before considering an investment in dividend-paying stocks in India. Factors such as strong balance sheets, manageable debt levels, and consistent revenue and profit growth might be indicative of a company’s ability to sustain and potentially increase dividend payments.
4. Growth Prospects
While dividends are important, potential for capital appreciation should also be considered. Companies with good growth prospects may offer both income and capital gains. Investing in high dividend yield stocks that also have strong growth potential might help maximise returns.
5. Sector and Industry Considerations
Certain sectors, like utilities, consumer goods, and financial services, are traditionally known for paying higher dividends. Diversifying investments across different sectors may help mitigate risks associated with industry-specific downturns and ensure a steady income stream.
Who Can Invest in the Highest Dividend Paying Stocks in India?
Anyone interested in generating a steady income stream from their investments might consider investing in the highest dividend paying stocks in India. This may include:
- Retirees: Individuals seeking regular income to supplement retirement funds.
- Income-Focused Investors: Those looking to build a portfolio that provides consistent dividend payouts.
- Conservative Investors: Investors preferring lower-risk investment options compared to growth stocks.
- Long-Term Investors: Individuals interested in reinvesting dividends to benefit from compounding over time.
It may be prudent for all investors to assess their financial goals, risk tolerance, and investment horizon before committing to high dividend yield stocks. Consulting a financial advisor could also help in tailoring a strategy to individual needs.
Conclusion
High dividend-yielding stocks indicate companies with financial stability. It also shows that the company is sustainable and its stock can give good returns over time. Refer to the list of the best, highest dividend-paying stocks mentioned in this article when you are curating your investment/financial plan. On that note, it is always worthwhile to consult a financial advisor while doing this. Happy Investing!
FAQs
1. What are dividends?
Dividends are part of the profit that shareholders earn on their shares for being part owners of the company. It can be paid in cash, stock, or other forms.
2. What are the top stocks that pay dividends?
The top dividend-paying stocks in India are:
- Coal India Ltd
- Oil and Natural Gas Corporation Ltd
- HCL Technologies Ltd
- Power Grid Corporation of India Ltd
- Bharat Petroleum Corporation Ltd
- Infosys Ltd
- ITC Ltd
These stocks are filtered using Dividend Yield on Tickertape Stock Screener. The data is from 3rd June 2024.
3. When do stocks pay dividends?
Dividends are usually a part of the profit that the company shares with its shareholders. Hence, they are declared quarterly after a company finalises its income statement.
4. How do high dividend yield stocks compare to other investment options in terms of risk?
High dividend yield stocks in India can be attractive for investors seeking regular income. However, they come with their own set of risks. While they may be perceived as less volatile than growth stocks, factors such as dividend cuts, high payout ratios, and sector-specific risks can impact their stability. Investors can consider the company’s financial health and market conditions to make informed decisions.
5. Why should investors consider high dividend-paying stocks in the Nifty 50?
Investing in high dividend-paying stocks in the Nifty 50 offers several benefits. Firstly, these stocks provide a steady and reliable source of passive income through regular dividend payments, which can be particularly appealing during times of market volatility.
Secondly, companies in the Nifty 50 are typically large-cap firms with strong financial health, which may offer a degree of stability and lower risk compared to smaller companies. Lastly, reinvesting dividends can lead to compound growth over time, enhancing the overall returns on your investment. However, it’s crucial for investors to consider potential risks, such as dividend cuts or sector-specific downturns, and to diversify their portfolio accordingly.
As an insatiable reader and learner, I’ve spent the last two years exploring the world of finance. With my creative mind and curious spirit, I love making complex finance topics easy and fun for everyone to understand. Join me on my journey as we navigate the world of finance together!
