It is always a great idea to buy stocks that are not only debt free, but, also have solid cash flows. These stocks also tend to provide great dividends, but, since the prices are high for such stocks, their dividend yields may not always be the best. Take a look at a few stocks that are debt free and can be good investment bets.
REC is one of the best dividend stocks to buy, as the dividend yield can be more than the interest rate offered by government banks on deposits.
For example, REC declared a dividend of 9.15 per share so far in 2018. If it maintains the same dividend in the coming years, the dividend yield would e nearly 9 per cent on the shares, which are now trading around Rs 103.
REC is a government owned company that is into financing the power sector. We do not expect too much of volatility in the earnings.
In fact, the stock is trading at a p/e of just 6 times one year forward earnings and also at a price to book of just 0.7 times. It is also a good long term stock to buy.
NMDC is a government owned company that is into iron ore mining. Recently, the prices of iron ore have been moving higher, which augurs well for the company.
Like several other government owned companies like HPCL, Coal India, Powergrid etc., NMDC is also an excellent play on dividends.
The stock is available at a dividend yield of around 4 per cent. Dividends are also tax free upto a sum of Rs 10 lakhs.
NMDC is not only a debt free company, but, is also a cash rich company with a stock pile of cash in its books.
NMDC: Fundamentally undervalued
NMDC has performed reasonably well over the last few quarters. Net profits have grown for the quarter ending June 30, 2018 to Rs 975 crores.
The company in all probability will do an EPS of Rs 15 for 2018-19. This makes the stock available at a p/e of just about 7 times.
With a steady cash flow, a decent dividend yield of around 4 per cent and firming iron ore prices, the stock of NMDC remains a good bet at the current levels. The risk to a downside remain limited at current market price. Check stock quote of NMDC here
The stock is an ideal pick on account of the decent dividend yield.
Coal India is not only a debt free company, but, is also a cash rich company. The good thing about Coal India is that the dividend yields on the stock are extremely high, which always makes it an attractive buy.
In fact, if the company maintains its past dividends, than the dividend yields itself would be in the range of 5-6 per cent.
There are also many positives of Coal India. The first being the fact that we are seeing a positive uptick in the prices of coal and volumes have been far better.
Apart from this, wage hikes are now behind, which should add lesser pressure on the company.
For the quarter ending June 30, 2018, the company posted a 61.07 per cent jump in consolidated net profit at Rs 3,786.44 crore. The momentum is expected to continue in the coming days.
The downside risk on Coal India is minimum, given the dividend yield. Check stock quote of Coal India here
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