If you are new to investing you do not want to begin the investing journey with high risk high beta stocks, that can result in losses. There have been many beginners to stock investing in India, who have invested money and never recovered that money. Once the disappointment sets in, you do not want to ever invest again. So, a good idea would be to stay focussed on quality stocks, which are not very high beta and have sound fundamentals.
Markets have turned extremely cautious with the Nifty and the Sensex losing as much as 13 per cent from recent highs. Beginners to investing must look at safe haven stocks. Here are a few that can offer you good dividends and excellent protection.
Jagran Prakashan is a leader in most of the businesses it operates. The company's "Dainik Jagran" is India's No 1 daily, Mid Day is the No 1 read evening daily newspaper in Mumbai and Radio City is the leading player in a host of markets including Bengaluru.
In fact, the print digital business has also been growing rapidly, with a growth of 25 per cent in the first quarter ending June 30, 2018, as compared to the corresponding period of the previous quarter.
The radio business under Music Broadcast has been doing very well and margins have expanded a great deal. This along with the digital business would continue to drive growth at the company. In fact, Music Broadcast saw a 300 basis point improvement in EBITDA margins in the first quarter ending June 30, 2018, as compared to the previous quarter of last year.
Why to buy the shares of Jagran Prakashan?
Jagran Prakashan is the leading player in most of the verticals. As elections to crucial states gather momentum, we see higher revenues from advertisement spent, given that "Dainik Jagran" is the No 1 newspaper in the country.
The company performed reasonably well for the quarter ending June 30, 2018, even at a time when newsprint costs continued to be high. The net profits of the company came in at Rs 75 crores, as against Rs 49 crores in the previous quarter ending March 31, 2018.
The EPS of the company was placed at Rs 2.44. Even if the company does an EPS of Rs 10 by 2019-20, the stock should command a p/e of 20 times at least, given its leadership status.
The stock has the potential to move to Rs 200 from the current levels. One must also remember that the company has always been rewarding its shareholders with buyback at higher prices and decent dividend yields. Buy the stock for long term investment.
NLC is a company that is engaged in power generation.
The government owned NLC India is the only government owned company to have announced a buyback of shares at a price of Rs 88.
The current market price of Rs 81 is good for many reasons. The first and foremost is that it is not very far from its 52-week low. The second is at this price the company's dividend yield itself works to around 6 per cent, which is not bad at all. Dividends are tax free upto Rs 10 lakhs per year.
The company is a cash rich company, which is why it has engaged in a buyback of shares. The dividends being offered means that the shares are unlikely to go low and hence there is some protection.
Recently, Coal India has entered into a pact with NLC India to set up a joint venture for power generation.
At Rs 81, the stock is available at a 1-year forward p/e of just 5 times, which makes the shares very attractive.
Coal India is a good stock for those looking at limited downside risk from the markets.
The stock is one of the best stocks for an attractive dividend yield. Tax free dividend of up to 6 per cent at the current market price of Rs 267, makes the stock a good pick.
Apart from this the company is a cash rich and has no debt on its books. It faces very limited competition and coal prices are unlikely to fall anytime soon. A good pick at the current levels. We are recommending this stock for beginners, as the shares have very limited downside risk from the current levels.
How shares are taxed?
Beginners to investing in shares should now understand the tax implications especially after the Union Budget.
There is a long term capital gains on tax that is applicable if you now sell shares after 1 year. The Union Budget 2018 has once again introduced this tax. Now, if you make a profit of more than Rs 1 lakh, you need to pay 10 per cent as capital gains tax. Short term capital gains tax on shares would continue to stay at levels of 15 per cent.
Beginners to investing should note these changes before investing.
The article is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article. The author owns shares in Coal India and Jagran Prakashan.