Last Updated on Oct 25, 2024 by Aishika Banerjee
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
Top 10 Highest Dividend Paying Stocks in India in 2024
| Name | Sub-Sector | Market Cap (Rs. in cr.) | Close Price (Rs.) | PE Ratio | Dividend Yield (%) |
| Bharat Petroleum Corporation Ltd | Oil & Gas – Refining & Marketing | 139,461.26 | 321.45 | 5.19 | 6.43 |
| Coal India Ltd | Mining – Coal | 294,116.21 | 477.25 | 7.86 | 5.34 |
| Oil and Natural Gas Corporation Ltd | Oil & Gas – Exploration & Production | 338,535.31 | 269.10 | 6.88 | 4.55 |
| Power Grid Corporation of India Ltd | Power Transmission & Distribution | 296,828.77 | 319.15 | 19.06 | 3.52 |
| ITC Ltd | FMCG – Tobacco | 590,082.19 | 471.70 | 28.84 | 2.91 |
| HCL Technologies Ltd | IT Services & Consulting | 499,254.52 | 1,844.90 | 31.80 | 2.83 |
| Hero MotoCorp Ltd | Two Wheelers | 102,261.83 | 5,113.60 | 27.31 | 2.74 |
| Infosys Ltd | IT Services & Consulting | 771,782.72 | 1,863.35 | 29.42 | 2.47 |
| Tata Steel Ltd | Iron & Steel | 185,979.65 | 148.98 | -41.91 | 2.41 |
| Tech Mahindra Ltd | IT Services & Consulting | 169,832.36 | 1,735.75 | 72.03 | 2.08 |
Note: We have used the Tickertape Stock Screener to get the best dividend-paying stocks in India. The information on this list of top 10 dividend stocks India is dated 24th October 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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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
Here are brief overviews of the top 10 dividend paying stocks in India, listed according to their dividend yields:
Bharat Petroleum Corporation Ltd
Bharat Petroleum Corporation Ltd (BPCL) was founded in 1952 and is one of India’s largest oil and gas companies. It operates in the refining, distribution, and marketing of petroleum products. BPCL plays a crucial role in meeting the energy demands of the nation.
The company has a market capitalisation of Rs. 139,461.26 cr., with a closing price of Rs. 321.45. The PE ratio is 5.19, and it offers a dividend yield of 6.43%.
Coal India Ltd
Coal India Ltd, established in 1975, is the world’s largest coal producer and operates under the Ministry of Coal, Government of India. The company is responsible for the bulk of India’s coal production, supplying the primary fuel for power generation and various industrial sectors.
The company has a market capitalisation of Rs. 294,116.21 cr., with a closing price of Rs. 477.25. Coal India Ltd has a PE ratio of 7.86 and a dividend yield of 5.34%.
Oil and Natural Gas Corporation Ltd
Oil and Natural Gas Corporation Ltd (ONGC), founded in 1956, is a leading oil and gas exploration and production company in India. ONGC is involved in the exploration, drilling, and production of crude oil and natural gas both onshore and offshore.
The company has a market capitalisation of Rs. 338,535.31 cr., with a closing price of Rs. 269.10. The PE ratio is 6.88, and the dividend yield is 4.55%.
Power Grid Corporation of India Ltd
Power Grid Corporation of India Ltd, established in 1989, is a state-owned electric utility company primarily engaged in the transmission and distribution of electricity. It operates a vast network of transmission lines and substations across India.
The company has a market capitalisation of Rs. 296,828.77 cr., with a closing price of Rs. 319.15. Power Grid Corporation of India Ltd has a PE ratio of 19.06 and a dividend yield of 3.52%.
ITC Ltd
ITC Ltd, established in 1910, is a diversified conglomerate with interests in FMCG, hotels, paperboards, packaging, and agribusiness. The company is particularly well-known for its dominant position in the tobacco industry.
The company has a market capitalisation of Rs. 590,082.19 cr., with a closing price of Rs. 471.70. ITC Ltd has a PE ratio of 28.84 and a dividend yield of 2.91%.
HCL Technologies Ltd
HCL Technologies Ltd, founded in 1976, is a leading global IT services and consulting company. The company provides a broad range of services, including software development, IT infrastructure management, and business process outsourcing.
The company has a market capitalisation of Rs. 499,254.52 cr., with a closing price of Rs. 1,844.90. HCL Technologies Ltd has a PE ratio of 31.80 and a dividend yield of 2.83%.
Hero MotoCorp Ltd
Hero MotoCorp Ltd, founded in 1984, is the world’s largest manufacturer of motorcycles and scooters. The company offers a wide range of two-wheelers and has a strong presence both in India and internationally.
The company has a market capitalisation of Rs. 102,261.83 cr., with a closing price of Rs. 5,113.60. Hero MotoCorp Ltd has a PE ratio of 27.31 and a dividend yield of 2.74%.
Infosys Ltd
Infosys Ltd, founded in 1981, is a global leader in IT services and consulting. The company offers a wide range of services, including software development, maintenance, and independent validation to clients worldwide.
The company has a market capitalisation of Rs. 771,782.72 cr., with a closing price of Rs. 1,863.35. Infosys Ltd has a PE ratio of 29.42 and a dividend yield of 2.47%.
Tata Steel Ltd
Tata Steel Ltd, established in 1907, is one of the world’s leading steel producers. The company operates in more than 50 countries and produces a wide range of steel products for various industries, including automotive, construction, and engineering.
The company has a market capitalisation of Rs. 208,873.41 cr., with a closing price of Rs. 148.98. Tata Steel Ltd currently has a negative PE ratio of -41.91 and a dividend yield of 2.41%.
Tech Mahindra Ltd
Tech Mahindra Ltd, founded in 1986, is a leading provider of IT services and business process outsourcing to the telecommunications industry. The company has expanded its services to include a wide range of industries such as finance, manufacturing, and healthcare.
The company has a market capitalisation of Rs. 169,832.36 cr., with a closing price of Rs. 1,735.75. Tech Mahindra Ltd has a PE ratio of 72.03 and a dividend yield of 2.08%.
What is a Dividend?
A dividend is a portion of a company’s earnings distributed to shareholders, usually as cash or additional shares. Companies pay dividends as a way to share profits with investors. These payments are typically made quarterly or annually and can provide a steady income stream. Dividends are often seen as a sign of a company’s financial health, but they are not guaranteed and can be reduced if the company faces financial challenges.
What are the Highest Dividend Paying Stocks?
The highest dividend-paying stocks, including consistent dividend paying stocks, are those that offer a high dividend yield, meaning they pay substantial dividends relative to their stock price. The most dividend paying stocks NSE are often found in stable sectors like utilities, consumer goods, and financial services. While high dividend yields can be attractive, it’s important to also consider the company’s ability to sustain these payments over time by evaluating its financial health and payout ratio.
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, it can be beneficial a deeper analysis of the company’s financials before investing in any high dividend paying stocks in India.
- Risk: Highest paying dividend 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 good dividend paying 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 or even the best dividend stocks of all time.
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 highest dividend 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 most dividend paying shares, thereby reducing price volatility.
Risks of Investing in High Dividend Yield Stocks India
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, even the top dividend paying stocks in India 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, including even the best dividend paying stocks for the long term, 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:
Highest dividend shares 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 pertaining to high dividend stocks in India. Economic or regulatory changes affecting these sectors can significantly impact the performance of highest dividend yield shares.
How to Identify the Best Dividend Paying Stocks in India?
Identifying the best dividend paying companies in India involves carefully evaluating several key factors to ensure that the investments are likely to yield consistent and sustainable returns. Here’s a guide on what you might consider:
- Consistency in Dividend Payments: You could look for highest dividend paying companies that have a long history of consistent or increasing dividend payments. Stocks that have maintained or grown their dividends over the last decade may indicate financial stability and a strong commitment to rewarding shareholders. This consistency can be a sign of reliable earnings and prudent management.
- Dividend Yield and Payout Ratio: It may be useful to examine the Nifty dividend yield, which reflects how much a company pays in dividends relative to its stock price. High dividend yield stocks might be attractive for income, but you might also want to check the payout ratio to assess sustainability. A moderate payout ratio could suggest that the company retains enough earnings to reinvest in its growth while still rewarding shareholders.
- Company Financial Health: Evaluating a company’s financial health could be crucial. You might consider looking at factors such as a strong balance sheet, low debt levels, and consistent revenue and profit growth. These indicators might suggest that the company can sustain and potentially increase its dividend payments over time.
- Growth Prospects: While dividends provide income, you might also consider the potential for capital appreciation. Companies with strong growth prospects could offer both dividends and capital gains, maximizing your returns. It might be beneficial to invest in dividend stocks that are not only paying well today but also have the potential for future growth.
- Sector and Industry Considerations: You could focus on sectors traditionally known for paying higher dividends, such as utilities, consumer goods, and financial services. Diversifying your investments across various sectors may help manage risks and provide a steady income stream, even if one sector experiences downturns.
By analysing these factors, you may be able to identify the best dividend-paying stocks for the long-term in India that align with your income and growth objectives.
How to Invest in the Best Dividend Paying Stocks in India?
Step 1: Launch ‘Tickertape Stock Screener’
Step 2: Click on ‘Filters’ and select ‘Dividend Per Share’
Step 3: Sort it from highest to lowest
With ‘Dividend Per Share’ you can identify the dividend declared by a company for each share. Whereas, with ‘Dividend yield’ you can assess the percentage of a company’s stock price paid as dividends annually, indicating investment income potential.
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 who prefer 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 in NSE. 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!
Frequently Asked Questions About Highest Dividend Yield Stocks
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. Which share gives highest dividends in India?
The top dividend-paying stocks in India are:
1. Bharat Petroleum Corporation Ltd
2. Coal India Ltd
3. Oil and Natural Gas Corporation Ltd
4. Power Grid Corporation of India Ltd
5. ITC Ltd
These top five dividend paying stocks are filtered using Dividend Yield on Tickertape Stock Screener. The data is from 24th October 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 regular dividend paying 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 portfolios 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!
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