It is always a good idea to make dividend stocks a part of your portfolio. This is especially, if there is a regular dividend payout three to four times a year. There are many stocks that pay regular dividends. Here are two stocks that we have selected for readers.
IndiaBulls Housing Finance
IndiaBulls Housing has a track record of declaring dividends at least 4 times a year. In 2018, the housing finance company declared a Rs 10 dividend three times and Rs 14 dividend once, taking the total dividend to Rs 44 per share.
Now, if you buy the shares around Rs 700, the dividend yield works to a decent 6.28 per cent. Having said that, it must be noted that dividend may to some extent protect a sharp downside in the stock.
Another important thing worth noting is that IndiaBulls Housing Finance is a stock that is very volatile. Housing Finance company stocks and NBFCs have been facing the brunt of investors, following the I&LFS crisis and liquidity issues.
The share of IndiaBulls Housing has fallen from levels of Rs 1400 to the current levels of Rs 700, which makes the stock attractive. Another thing worth noting is that the stock is trading at a p/e of just 8 times one year forward earnings, which is very cheap.
This is a stock that does not see too much of volatility. It is a cash rich government owned enterprise, that has an a virtual monopoly in the coal mining business.
For the second quarter ending Sept 30, 2018, the company reported a good set of earnings. Coming to the dividends, if one has to hazard a guess, then we can anticipate a dividend of at least Rs 20 per share from the company. Coal India normally declares dividends in Feb. Based on the assumption of the above dividends, the dividend yield works to 7.62 per cent, which is not bad at all on the current market price of Rs 260.
Interestingly, the shares of Coal India are trading at almost a 52-week low price, which makes it an interesting pick.
Tax free returns
Dividends are tax free in the hands of the investors up to a sum of Rs 10 lakhs, which makes them a very interesting proposition. Yields on bank deposits are near 7.5 per cent, which are taxable. If you are getting better post tax yields on dividend stocks like Coal India, they remain much better picks.
The downside risk also from a fall in share price gets restricted because of the dividends.
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