The one thing that a retired person looks for is a steady regular or monthly income. If you are planning to retire in the next few years or if you are in your early 50s, you can start building a portfolio of companies, which give regular dividend and whose dividend yields could be anywhere above 6 per cent. We have selected a few companies, where the dividend yields would be above 6 per cent. Remember, dividend distribution depends on profitability and hence are not certain. However, we have chosen companies, which are mostly from the mining sector and whose dividends are unlikely to fall much.
NLC is a government owned company, that is engaged in the mining of lignite, thermal power generation, solar power generation etc. Mining tends to be a high margin and assured business. This has led to the company consistently declaring solid dividends.
For the year ending March 2019, NLC India declared an equity dividend of 4.53 per share. At the current share price of Rs 57.60, it results in a dividend yield of 7.80 per cent. This is actually more than bank deposits and that too tax free, with a dividend income of up to Rs 10 lakhs. It is unlikely that the business prospects of the company would change too much in the near future and hence the dividends of the past could be maintained.
This is again a government owned company which is into mining of Coal. Again, a high margin assured business, without too many threats. India also imports coal and hence for a company like Coal India, the business prospects continue to remain good.
Coal India last year declared a dividend of R 13.1 per share. At the current market price of Rs 197, the dividend yield itself works to around 6.67 per cent.
We do not expect the dividends to fall too much this year, given the fact that Coal India has been performing well over the last few quarters. The one important thing to remember is that as the share price climbs, the dividend yields fall and hence you should not be buying the share at any and every price.
This is again a mining company, with a solid presence in lead, zinc and of course silver mining. For the FY 2019, the company declared a dividend of as much as Rs 20 per share. Based on the same, the dividend yield works to 9.25 per cent.
We do not expect the company to declare such a high dividend this year as well. However, even if it does drop the dividends to Rs 15 per share, the yield works to around 7 per cent, at the current market price of Rs 216. If the share price drops even further, the dividend yield could get even more attractive.
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