Several analysts have been advising caution as the Indian markets are overpriced. If there is a crash there are some stocks that may not fall too much simply because they are great dividend bets. Here are a few stocks that could be excellent bets on dividends.
Shares in Infosys have come crashing down to levels of Rs 890, which is very close to its 52-week low. In the year 2016-17, the company declared Rs 25.25 per share as dividend. We believe it was a bad year for Infosys and going ahead the company will increase the dividend, given that the recent buyback of shares has reduced the paid up capital of the company. The board had also decided to increase the dividend payout ratio to 70 per cent of the free cash flow. If you assume that the company will declare a dividend of around Rs 35 per share in the next year, the stock could yield a dividend yield of close to 4 per cent. Not a bad tax free bet considering bank interest rates have fallen to near 6 per cent. Check stock quote of Infosys here
It is always very difficult to predict the dividends of Coal India, given that they have largely to do with profitability. In 2016-17, the company paid a total dividend of Rs 19.75 per share. If we assume the same dividend is retained the shares at Rs 250 would give a dividend yield of close to 7.6 per cent. However, given that profitability might be under pressure this year, it would be reasonable to expect a dividend of around Rs 16 per share. If it offers this kind of dividend you get a yield of 6.4 per cent, which is the same as Bank Deposits. Interestingly, dividend is tax free upto Rs 10 lakhs of dividend income, while Bank Deposits are fully taxable. Check stock quote of Coal India here
Iron ore prices are looking up and the next few quarters could be good for NMDC, which has always been an excellent play on dividends. A dividend yield of around Rs 8 per share can be expected this year, given the firming or iron prices recently. At the current market price of Rs 130, NMDC can fetch a dividend yield of 6 per share. This again is tax free in the hands of investors. What this also means is that there maybe very limited scope for a downtick in share prices.
This is a stock like Infosys, which is virtually being traded near 52-week lows. In 2016-17, the company declared a total dividend of 6.75 per share. At the current market price of Rs 160, the dividend yield on the work to near 4.5 per cent. It is hoped that the company would be able to retain the dividend, failing which the yield would fall lower. Interestingly, most of the companies mentioned above are from the government of India owned companies. Check stock quote of ONGC here
HPCL and BPCL were other stocks that offered good dividend yields, but, have since rallied and hence the yield from them have fallen. However, another refining company, Chennai Petroleum is offering dividend yields of 4.67 per cent.
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