There are many dividend stocks that tend to give better yields than bank deposits. A few of them have a consistent track record and the business is not disruptive, so dividends have and can be maintained for years.
Stocks with a good dividend yield based on last year
|Name of the fund||Dividends for 2020-21||Yield at current market price|
|Coal India||Rs 12.5 per share||8.44%|
|REC||Rs 11 per share||7.00%|
|PFC||Rs 8 per share||6.00%|
One must now forget that the dividends declared in 2020-21 was in a covid induced year. For example, Coal India was hit production cuts and yet managed a decent dividend.
Dividends could be enhanced, thus giving better yields
We believe that in the coming years, the dividends would be enhanced thus giving investors a better dividend yields. For example, brokerages are suggesting that Coal India could give a dividend of Rs 18.5 in 2022-23, thus taking the dividend yield to 12.65%.
"We see no risk to its E-auction volumes as power demand would start receding in October, seasonal increase in Coal India's volume movement andmajor chunk of auction volumes are already dedicated for power utilities. In light of better operational performance and strong outlook on E-auction realisations, we maintain Accumulate with a target price of Rs 164 based on EV/EBITDA of 3 times FY23e," Prabhudas Lilladher has said in its recent report on Coal India.
PFC, REC Too may declare better dividends
Both these companies are into infrastructure financing and we believe that they can enhance the dividends in the coming years, thus improving yields further. And, if the share price goes up it offers the investor and opportunity to see an increase in capital as well.
The only problem these days in recommending stocks as a buy, including dividend stocks is that the markets have gone-up a great deal. To that extent the risk of a fall remains. While we do recommend, investors should buy only in small quantities. Many brokerages these days are warning investors of highly priced markets. In fact, a recent report from a leading brokerage house clearly highlighted the fact that the markets are over priced, with the Sensex trading at a 18% premium to long-term averages.
Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article.