Top 10 Highest Dividend Paying Stocks in India
As a stock investor, you aim to earn back high dividends from your investments regularly. In other words, the highest dividend paying stocks can be a motivating element for novice investors. One of the reasons investors prefer buying stocks is good returns in the form of dividends. However, choosing the right stock requires good market understanding.
To help you out, we have listed the top 10 high dividend paying stocks in India, suitable for both novice and seasoned investors. But learning some basic information about the same is essential before we explore the list.
What is Dividend?
A dividend is one form of payment a company makes to its shareholders. Company directors decide on the total dividend to be paid after scrutinizing the company’s financial condition. Although they are not necessary, dividends are normally distributed to shareholders as a percentage of the company’s profits.
After paying off debts, a company may provide its shareholders with a dividend for its leftover profits. Nonetheless, corporations can pay dividends or not in situations involving cash flow constraints or the necessity for reinvestment. The company sets a record date for when it declares dividends, and shareholders registered by that date can receive dividend payments according to their holdings.
Understanding Dividend Yield Stocks
High-yield dividend stocks are the income traders or investors receive as per the current stock price. The dividend yield stocks are calculated using the below formula-
Dividend Yield = (Annual Dividend / Share Price) x 100
Investors are drawn towards top dividend-paying stocks that have a yield that is higher than that of a benchmark. These equities can generate a steady income stream for investors, who frequently reinvest their gains or use them to fund long-term objectives like retirement.
What is the Highest Dividend Paying Indian Stocks in 2024?
By December 2023, the total capitalization of the Indian stock market had reached $4 trillion, which is huge compared to the past few years. This has also pushed many investors to trade on stocks that can offer good dividends with the help of portfolio management services. We have listed below the top 10 highest dividend-paying Indian stocks in 2024 so you can choose accordingly.
| Stock Name | Sector | Market Capitalization (Cr) | Payout Ratio | Share Price | Historical Dividend |
| Hindustan Zinc Ltd | Mining | Rs 1,31,851 | 3.04 | Rs 310.7 | 66.02 |
| Vedanta Ltd | Metals | Rs 99,390 | 3.57 | Rs 278.90 | 196.35 |
| Colgate Palmolive (India) | FMCG | Rs 67,865 | 1.01 | Rs 2522.65 | 11.68 |
| Schaeffler India Ltd | Auto Parts | Rs 51, 345 | 1.28 | Rs 2846.90 | 157.85 |
| Zee Entertainment Enterprises Ltd | TV Channel | Rs 23, 840 | 2.34 | Rs 153.35 | 137.13 |
| Sanofi India Ltd | Pharma | Rs 19,391 | 2.12 | Rs 8498.35 | 17.77 |
| Thyrocare Technologies Ltd | Hospitals & Diagnostic | Rs 3,310 | 1.48 | Rs 660.90 | 53.26 |
| Novartis India Ltd | Pharma | Rs 2153 | 1.13 | Rs 929 | 68.10 |
| TV Today Network | TV Channel | Rs 1449 | 4.73 | Rs 234.60 | 46.53 |
| Gloster Ltd | Textiles | Rs 990 | 2.11 | Rs 884 | 165.27 |
Highest dividend-paying Indian stocks in 2023
Below is the list of highest dividend paying Indian stocks in 2023 that would yield you good returns-
| Stock Name | Sector | Market Cap | Dividend per share |
| 3M India Ltd | Stationary | 30,013.47 | 950 |
| Sanofi India Ltd | Pharma | 15,761.81 | 570 |
| Bosch Ltd | Auto Parts | 55,693.94 | 480 |
| Page Industries Ltd | Apparel & Accessories | 42,338.93 | 380 |
| Abbott India Ltd | Pharmaceuticals | 47927.48 | 325 |
| Nestle India Ltd | FMCG – Foods | 2,17,252.57 | 220 |
| Maharashtra Scooters Ltd | Two Wheelers | 6,260.86 | 160 |
List of highest dividends paying Indian stocks in 2022
Wondering what could have been the highest dividend-paying Indian stocks in 2022? Below is the list-
| Stock Name | Sector | Market Cap | Dividend Yield | 5Y Avg Return on Investment (%) |
| GAIL (India) Ltd | Oil & Gas | 59,701.90 | 7.44 | 13.93 |
| Hindustan Zinc Ltd | Coal | 1,27,203.23 | 5.98 | 22.72 |
| Indus Towers Ltd | Telecommunication | 54,092.19 | 5.48 | 16.77 |
| Bajaj Auto Ltd | Auto Maker | 1,02,086.77 | 3.97 | 20.79 |
| Tech Mahindra Ltd | IT | 1,01,638.70 | 3.89 | 17.89 |
| HCL Technologies Ltd | IT | 2,98,728.46 | 3.82 | 20.69 |
| JSW Steel Ltd | Steel Making | 1,73,120.33 | 3.02 | 13.26 |
Which Sectors Offer Highest Dividend Paying Stocks?
Investors must choose between a basket heavy in large-cap equities and one heavy in small- or mid-cap firms based on their investing objectives and risk tolerance. When making the selection, they can also opt for long-term dividend streaks or term dividend streaks. There are different sectors that offer the highest dividend paying stocks. Listed below are a few:
- Banking Industry
The financial industry is very profitable for investors, with a high average yield attributed to real estate investment trusts (REITs) and associated sectors. The industry’s banks and insurance providers frequently provide far lower yields.
- Utility Industry
Dividend investors tend to favor the utility sector, which includes a variety of industries such as foreign, gas, electric, and water. Companies falling under the utility sector are considered defensive because of their steady revenue, unaffected by economic conditions, even though their prices have only slightly increased over the past five years.
- Consumer Products Industry
The consumer products industry, led by the tobacco and cigarette industries, is well known for its high yields. Even though low-yield sectors are common, this sector offers exciting investment prospects.
- Services Sector
Services is the largest industry and includes companies from 60 businesses, such as shipping and gambling. Interestingly, this industry’s average dividend yield often exceeds regularly.
- IT Sector
The domestic telecom sector leads the technology sector and is well known for its high-yield equities. Even though the tech sector isn’t typically linked to lucrative dividends, certain businesses include dividends in their financial plans.
- Healthcare Industry
Regarding dividend yields, the healthcare industry offers a variety of opportunities, with the pharmaceutical manufacturing sector frequently offering the best returns. The average yield for the sector as a whole is in line with the market, notwithstanding this variance.
Who is Eligible for High Yield Dividend Stocks?
Two types of investors can invest on high yield dividend stocks-
- Investors Looking for Passive Income Sources
Like every other earning person, stock investors also look for a passive income source. So they go forward to invest in dividends.
- Investors looking for a Low-Risk Appetite
As low-risk investments, dividend yield funds are best suited for people with a low tolerance for risk because they entail far fewer risks than other stock mutual funds.
What are the Benefits of Investing in High-Dividend Stocks?
There are different benefits of investing in high-yield dividend stocks. Some of these are-
- Reliable Income: For retired individuals looking for a consistent income stream from their assets, dividend-paying stocks may be a particularly alluring option.
- Good Capital Appreciation: Businesses that distribute dividends are frequently well-established and financially stable, which may eventually result in capital growth.
- Protection from Inflation: One benefit is that dividends help during inflation through a consistent income stream that can keep up with growing prices.
- Stability: Companies that pay dividends tend to be more stable than those that don’t since they generally have robust cash flows and fewer significant fluctuations in their stock values.
What are the Different Criteria for Selecting High Yield Dividend Stocks?
There are specific criteria for selecting high-yielding dividend stocks. These are-
- Dividend Yield: A high dividend yield is typically defined as 4% or more, depending on the sector and state of the market. Stocks with a track record of consistently high dividend yields are what you should seek out.
- Dividend Growth: You can also consider how quickly the company increases its dividend payments. A company’s financial soundness and stability are typically shown by a constant increase in dividend payouts over time.
- Earnings and Long-term Cash Flow: An analysis of the company’s cash flow and earnings is necessary to ensure dividend payments continue. Seek out businesses with consistent cash flow growth and revenue.
- Payment Ratio: The payout ratio is the proportion of profits a business distributes as dividends. Companies paying to release good dividends is a sign of long-term sustainability in the industry.
- Industry and Market Conditions: High dividend payments are a hallmark of some businesses, including utilities and consumer staples. The performance of the highest dividend-paying stocks may be impacted by market factors like inflation and interest rates, so you should also consider those.
What are the Factors to Consider Before Investing in High Yield Dividend Stocks?
When investing in high yield dividend stocks, there are certain factors to consider for a better return. Some of these are-
- Learn more about the Company
Learning about the company is the first factor to consider, especially in volatile industries like energy or pharmaceuticals, which rely heavily on regulatory compliance. Ensure your business is sustainable, has compliance standards, a robust corporate governance structure, and is fundamentally sound.
- Avoid Companies With High Debt
A company should be wary of heavy debt if it maintains substantial dividend payouts. Many businesses use debt to pay dividends to preserve the value of their shares. Debt is a crucial sign of a business’s financial stability. Research the company and its debt ratio well before investing in its dividend.
- Always Prefer Companies with Consistent Dividend Payouts
A stable dividend payout indicates that the business is doing well. This suggests that the company is stable and well-managed in the long term. Over time, the compounding effect helps make earnings more noticeable, even if dividends increase only a small amount each year.
Conclusion
With proper research material handy and a list of the top 10 highest dividend paying stocks, you can invest in the right stock that can help you earn long-term income. It also represents the company’s healthy financial growth. So, invest now and start earning dividends as passive income.
FAQs on Dividend Paying Stocks
Q1. What are dividend paying stocks?
Ans- Dividend paying stocks are shares of companies that distribute a portion of their profits to shareholders in the form of dividends, typically on a regular basis.
Q2. How do dividend paying stocks differ from non-dividend paying stocks?
Ans- Dividend paying stocks provide a regular income stream to investors through dividends, while non-dividend paying stocks reinvest profits into the company for growth.
Q3. How are dividends paid out to shareholders?
Ans- Dividends are typically paid out in cash, although some companies offer dividends in the form of additional shares of stock or through dividend reinvestment plans (DRIPs).
Q4. Why do some stocks pay higher dividends than others in India?
Ans- Stocks pay higher dividends based on their profitability, cash reserves, and dividend policies set by the company’s management.
Q5. What factors influence a company’s decision to pay dividends?
Ans- Factors influencing dividend payments include profitability, cash flow, financial health, management’s dividend policy, and growth opportunities.
Q6. How do I find highest dividend paying stocks in India?
Ans- Investors can find highest dividend paying stocks by researching financial news, stock market websites, and using stock screeners that filter companies based on dividend yield.
Q7. Are dividends guaranteed for dividend paying stocks?
Ans- Dividends are not guaranteed and can be adjusted or suspended at any time by the company’s management, depending on various factors such as financial performance and economic conditions.
Q8. How can investors benefit from investing in dividend paying stocks?
Ans- Investors can benefit from dividend paying stocks by earning regular income, participating in potential capital appreciation, and potentially enjoying tax advantages on qualified dividends.
Q9. Which are some of the highest dividend paying stocks in India?
Ans- Some of the highest dividend paying stocks in India include Coal India, Hindustan Zinc, Vedanta, Power Finance Corporation, and Indian Oil Corporation.
Q10. Can the dividend yield of a stock change over time in India?
Ans- Yes, dividend yield can change based on factors such as changes in the stock price, dividend payouts, and earnings of the company.
Q11. Are there any tax implications for investing in dividend-paying stocks?
Ans- Yes, dividends received from stocks are subject to taxation under the Income Tax Act. However, there are provisions for certain exemptions and deductions based on investor profiles and amounts received.
Q12. How do I know if a company’s dividend is sustainable in India?
Ans- Investors can analyze financial statements, cash flow statements, dividend history, and payout ratios to assess the sustainability of dividends for a company in India.
by Instockbroker Team | March 6, 2024