5 govt bank shares with high dividend yields you must buy

Updated: Wednesday, March 27, 2013, 9:35 [IST]

If you buy government owned banking shares now, chances are you will earn higher then bank fixed deposits through dividends, if these banks maintain the same dividend they did last year. Remember, dividend unlike interest income is tax free, which means your returns are even higher. Take a look at these 5 public sector banking stocks and how you could earn a tidy dividend from them.

Vijaya Bank

Last year, Vijaya Bank declared a dividend of 25 per cent. The stock is currently traded at Rs 46. So, if you buy the stock at this rate, you could get 25 per cent dividend sometime in July-August. This makes for an annualised yield of more than 11 per cent.

Indian Overseas Bank

In 2012, Indian Overseas bank declared a dividend of 45 per cent. This year, if the bank maintains the same dividend, the annualised yield if you buy the share now at Rs 65 is likely to be more then 14 per cent. Again, remember that dividend is tax free.

United Bank

Last year United Bank declared a dividend of 24%. The stock is trading Rs 55.45. If you buy the stock and hold it till August-September you are likely to get a dividend yield of around 9% on an annualised basis.

IDBI Bank

The IDBI Bank stock hit a 52-week low on Thursday of Rs 79. The bank declared a dividend of 35% last year and if the same is maintained the dividend yield on an annualised basis will work to around 9%.

UCO Bank

Like IDBI Bank, the stock of UCO Bank hit a 52-week low of Rs 54.15 on Thursday. The dividend yield if you buy the stock now would work to around 11% on an annualised basis. Again, the assumption is that the bank should declare the same dividend as last year.