2 Stocks Where SIPs Could Yield Good Returns For Investors

Updated: Saturday, January 8, 2022, 10:16 [IST]

If you thought that SIPs is only possible in stocks, that is not the case. Investors can choose wisely and pick stocks where they see a good growth potential and where their investment can also fetch good returns in the form of dividends. Here are two stock to look at.

What do we mean by stock SIP?

By stock SIP we mean is to buy these stocks from your monthly savings. So, if you save Rs 10,000 from your monthly income you can add stocks worth Rs 10,000 to your portfolio. In short, investing directly in stocks through way of Systematic Investment Plans.

The stock we have selected are largely ones that have generated god and consistent returns over the last 10 years. If you add their dividends and bonus shares, their returns are very good.

Bajaj Auto Ltd

This has been a good stock to own over the last few decades, where growth has been constantly witnessed year on year. The company has cash and cash equivalents in excess of Rs 17,000 crores. The one good thing to start an SIP in the stock would be the dividends that you would fetch sometime in the month of May. The company last declared a dividend of Rs 140 per share, so you are getting more than 4% back at the moment by way of dividends. The stock for the time being has fallen from levels of Rs 4,361 to the levels of Rs 3391, which has been a pretty decent fall.

The company has ambitious plans for the future and export markets for the company have also been doing well. A debt free company, high cash and cash equivalents, and ambitious product roll out plans make the stock a good addition to the portfolio by way of SIPs. The stock is also inexpensive at the moment, given valuations of around 14 times one year forward earnings.

Bajaj Auto stock last closed at Rs 3390 on the NSE.

Hero MotoCorp

Hero MotoCorp, is the world's largest manufacturer of motorcycles and scooters has had a good run over the years. The company continues to report good numbers. In fact, for the year 2021, the Company had the best ever global sales. It sold 2.89 Lakh units of motorcycles and scooters in its markets spread across Asia, Africa South and Central America and the Caribbean in calendar year 2021 (JanuaryDecember), clocking a robust growth of 71% over the corresponding period in the previous year (2020) when it had sold 1.69 Lakh units in its markets outside of India.

This is another stock that we like for SIPs is because of its good returns by way of dividends. At the current market price the stock gives a dividend yield of almost 4.5%. The stock like Bajaj Auto is debt free and the recent fall in the price makes for an interesting pick. The p/e on the stock right now is less than 15 times, which is reasonable for a Nifty stock. Regular buying in the stock could yield good returns.

The stock of Hero MotoCorp last closed at Rs 2499 on the NSE.

A word of caution on the markets

We would advise investors not to invest lumpsum at this juncture in stocks. The ideal way would be to invest small amounts regularly. In markets that are over priced there are always risks of sharp falls, so small monthly investments by way of SIPs would be a good bet.

Disclaimer

Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies and the author are not liable for any losses caused as a result of decisions based on the article.