2 Dividend Stocks To Buy For Those Seeking Sound Returns

Dividend income is a good source of steady income, especially if the company has a reliable track record of paying dividends. Here are 2-companies where the dividend track record has been strong and long and where disruption in dividend may not be expected.

Indian Oil Corporation

Based on the track record of Indian Oil Corporation, one can expect good dividends in the future as well. In 2020-21 the company declared a dividend of Rs 7.5 per share in Jan 2021 and again Rs 3 in the month of March, 2021, taking the dividend to a total of Rs 10.5 per share.

If you take the current market price of Rs 118, the dividend yield is close to that 9% mark. Having said that the stock is at a near 52-week high and the Sensex is at around the 59,000 levels. A risk of a downside for the markets means that while the dividend yields would remain good, there is always a possibility of capital erosion, simply because of where the markets are now.

Coal India

This is another stock that is worth mentioning as it has an impeccable history of paying dividends. Coal mining business is a monopoly with virtually no disruption to the business, unless there is the occasional labour issues. It is also a debt free company.

So, if you assume the dividend declared in FY 2020-21 of Rs 12.5 per share, the dividend yield works to around 8.91%. The problem with the Coal India stock is that over the last 2-3 years, the stock has lost heavy ground, resulting in capital losses. However, it is okay for dividends.

One good thing that we must point out though is the fact that there is a possibility of the stock going higher as dividend could increase in the next few years. There was a time in 2015, 2016, when the dividend per share was in their twenties. If it comes back to those glory days, the stock will rally as well.

Disclaimer

Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Please consult a professional advisor. we have been telling investors to avoid lumpsum investments at this stage, given where the markets are.