Coal India shares have plunged to a new 52-week low of Rs 242. In fact, the stock has not scaled such low levels in the last two years. However, the lure of dividends, which are normally declared in the month of Feb, may see the stock trending higher in the coming weeks.

The company in 2018, declared a dividend of Rs 16.5 per share.

Higher dividends to boost yield

It is unlikely that Coal India would declare the same dividend as last year. In fact, profitability has been much better this year. It is likely that we could see a dividend of at least Rs 19 per share. If that in fact is declared in the month of Feb, 2019, the dividend yield on the stock would be 7.90 per cent.

Now, this is not only tax free up to Rs (10 lakhs), but, its post tax dividend yields are much better than bank deposits. Coal India shares are likely to rally, as we approach the month of Feb and this is a trend that we have seen in the past as well.

Not very expensive on valuations

Shares of Coal India are also not too expensive when it comes to fundamentals as well. The stock is trading at a p/e of just 9.67 times, the anticipated EPS of Rs 26.1 for FY 2018-19. This is lower than the historic average, which makes the stock an attractive pick.

The company's quarterly numbers for the period ending Sept 30, 2018 show that costs have been under control. On the other hand e-auction realizations in the coming quarters are also expected to be much better.

The Coal India stock is definitely a good pick for those looking for a good long term and consistent dividend paying story.