7 Undervalued And High Dividend Stocks To Buy In India

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Dividends at the moment are tax free in the hands of  the investors. Of course from April 1, 2016, they become taxable, if the dividend income is more than Rs 10 lakhs.

There are reports that many companies would rush to declare dividends ahead of March 31, 2016. Irrespective of that we have chosen a list of 7 stocks that are attractive in terms of dividends.

The stocks chosen are stocks that are relatively better off in terms of fundamentals and are not merely high dividend yielding stocks. They are great bets fundamentally as well. 

Dividend yield of more than 5%

Karnataka Bank has to be a decent bet, not only because of its dividend yield of almost 5.14 per cent, also because this stock is highly undervalued.

At Rs 96, the stock is trading at a p/e of under 5 times and a price to book value of 0.56 times. A decent bet at the current levels.

A goot bet if crude rises

If Oil India maintains the same dividend as last year, the yield can work out to 6.5 per cent. This is near the interest rate of some bank deposits, if you consider post tax yields.

If crude prices recover, expect a sharp uptick in the stock.

Cash rich company

Coal India is yet another stock that gives a dividend yield in excess of 6 per cent - 6.37 per cent to be precise at the current market price of Rs 325.  Again, a stock that might not lose too much ground, if the price falls.

A dividend yield of 5.5%

With a dividend yield of 5.5 per cent, JB chemicals also remains a good investment.

The p/e ratio for the stock is around 14 times, which is much lower than peers. It can also be an interesting pick at the current levels, owing to the fact that business prospects remain bright for the company going forward.

One of the better managed banks

Federal Bank is yet another stock that can give you a dividend yield of close to 5 per cent. The stock like most other banking stocks have fallen sharply. Has the potential to give decent returns at the current levels.

A great dividend yield

NMDC has over the years been an eternal favourite, when it come to dividend yields in the country.

The stock gives a dividend yield of almost 9 per cent. Should commodity prices recover, the stock has the potential to give good returns.

A good yield

Cairn India is giving a dividend yield of close to 7 per cent. The stock is a good play on crude oil prices. At some stage crude oil prices should recover, which should drive the share price of Cairn India also higher.

Story first published: Tuesday, March 8, 2016, 8:58 [IST]
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