Some majority government owned company stocks could be good bets from a long-term perspective, because of their dividend yields, entry barriers and near monopoly activities. Here are 3 government owned company shares, which can offer you a dividend yield between 5 to 7 per cent, have a robust business model with strong entry barriers.
This is a government owned oil and gas exploration company, which again is the nation's largest oil and gas exploration company.
The company for FY 2018-19, declared a dividend of Rs 7 per share, taking the dividend yield to 5.55 per cent at the current market price of Rs 126.55. It is likely to declare a dividend in the month of Feb again and for 2019-20, it would not be a surprise if the dividend is even enhanced.
ONGC is one stock that is trading at a p/e of just 5.8 times one year forward earnings, as against a 5-year average of 9.4, taking the p/e discount over the 5-year average to almost 37 per cent.
This means the shares are trading at a heavy discount to the 5-year average, which makes it extremely attractive. Prospects for the company are unlikely to change and hence based on the dividend, assured business prospects and the number one position the share merits investor attention. A good government company share to buy for the long term.
Coal India is the largest coal mining company in the world and has a virtual monopoly in India. It is a cash rich, debt free company with a solid record of paying dividends.
Again, like ONGC it is a government owned company that is trading at a discount to its long-term averages. In fact, the current p/e is just 8.1, as against a 3-year p/e of 12.1 and a 4-year p/e of 14.4.
Shares of Coal India are available at a dividend yield of 6.82 per cent, making them attractive. The 1-year forward p/e also looks attractive at around 9 times. This government owned stock is a good bet for regular dividends.
Gail is a leading player in the gas pipeline, LPG, petrochemicals, gas sourcing upstream and downstream business.
The shares of GAIL hold tremendous value in associates and subsidiary companies and remains a solid value proposition. The company holds a 32.5 per cent holding in Mahanagar Gas and the shares of Mahanagar Gas themselves are trading over Rs 1,000. Another joint venture like Indraprashtha Gas is also a solid value proposition, apart from subsidiaries like GAIL Gas Ltd. It has scores of such high quality subsidiaries and associate companies.
GAIL reported a net profit of Rs 1,167.58 crore for the second quarter ending Sept 30, 2019, which dropped 34.73 per cent lower than Rs 1,788.98 crore net profit reported by the company in the corresponding quarter of financial year 2018-2019.
However, we believe that going ahead, there may not be too many headwinds for the company and it could continue to churn out a much better performance. The stock at Rs 116 is trading at a new 52-week low, which is one of the prime reasons to be buying into the stock.