Markets are unlikely to have a runaway rally in the next few months, given that we have the General Elections in May.
All kind of predictions are holding, with even many now predicting the possibility of a weak coalition. The outcome of the elections remains difficult to predict and hence it is good to look at stocks with a good dividend yield. Here are a few stocks that could have limited downside risk, because of their dividend yields.
Coal India on an annual basis gives a dividend yield of around 7 to 8 per cent. The company already declared a dividend of Rs 7.5 in FY 2018-19. Another rs 9 to Rs 10 per share dividend can be expected in Feb 2019. Annually one can expect a dividend yield of t to 8 per cent, at a share price of Rs 230.
The shares of Coal India are also a good bet on account of the fact that the shares are not very expensive at the current p/e of just under 10 times.
It is unlikely that the stock would see too much of volatility, given that dividend yields would limit downside in the stock.
The business of Coal India also is an assured business, that is virtually a monopoly. Again this is a cash rich company that is debt free.
One is getting this stock at almost half the price that was prevailing in Jan last year. From a 52-week high of Rs 1440 in Jan 2018, IndiaBulls Housing is now available at a price of Rs 818. The shares of the company yield a pretty cool dividend yield of 5 per cent. The company also declares a dividend of almost 4 times each year.
However, NBFCs and housing finance companies have recently been at the receiving end of the IL&FS crisis.
The shares are also very reasonably valued at under 10 times, one year trailing EPS. The price to book at around 2.6 times, is also reasonable. The company is likely to grow business at 20 per cent in the next few years. The stock hence looks attractive at the current price of Rs 818.
NMDC is a government owned iron ore mining company. The shares have recently fallen to 52-week low of Rs 88. At a price of Rs 90, the shares have limited downside risk to their dividend yields of near 5 per cent.
Last year the company declared a dividend of Rs 4 per share and it is highly possible that it retains the same dividend, in which case the dividend yield would be very near to 5 per cent.
We are working on the assumption that the dividend would be maintained. The stock performance would also depend on iron ore prices and NMDC tends to revise iron prices every month.
All in all, the stock is a good bargain at the 52-week low price.
This article is strictly for informational purposes only. It is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author of this article do not accept culpability for losses and/or damages arising based on information in this article.