3 Stocks To Buy With Strong Balance Sheets & Healthy Dividend Yields

It's hard to find stocks that are offering good dividend yields, given the way the markets have rallied in the last few quarters. In fact, profit margins for companies have also been under pressure as raw material prices rise. Here are a few stocks that are good for their dividend yields and have strong balance sheets.

ITC

This company is a diversified conglomerate with interests from tobacco to hotels to a solid presence in FMCG. ITC has been paying dividends consistently for the last many years now and has an impeccable track record in doing so.

The company declared a dividend of Rs 10.75 for the financial year ending March 31, 2021. Based on the current market price of ITC of Rs 220, the dividend yield works to 4.87. The stock is also not very expensive considering a price to earnings multiple of less than 20 times. That is pretty decent for a company that continues to grow and is also in the FMCG space. We suggest buying the stock for its dividend yield and growth prospects in the future especially from the FMCG space.

Coal India

This stock at the moment gives a dividend yield of nearly 10% based on the current market price of Rs 160. However, the problem for this stock right now is that it barely moves. It has been the worst performers among Nifty stocks. While the dividend yields are healthy, the stock does not tend to give much appreciation. When there was a coal shortage in the country, the stock of Coal India rallied to about Rs 200, but, has fallen since.

No doubt this is a cash rich company, but, the stock lacks much of movement. There have been no much concerns for Coal India in the past except the labour problems, which are an "on and off" issue.

Bajaj Auto

This stock has fallen sharply from levels of Rs 4300 to the current levels of Rs 3436. This has made the dividend yields on the stock rather attractive at 4.12%, based on the current market price of Rs 3436. This is also a cash rich company with cash and cash holdings of more than Rs 17,000 crores.

We expect Bajaj Auto to continue to deliver on numbers in the coming quarters as lockdowns and curfew pressure ease. Buy the stock of Bajaj Auto for stable dividends and possibility of good capital appreciation on the stock, given the sharp fall in the last few quarters. In fact, the company may also enhance the dividends going forward, which should further boost the dividend yields. This is a stock that has generated good return for investors over the last few decades and may continue to do so in the future as well.

Disclaimer

Investing in equities is risky and investors must therefore understand the risk. The author and Greynium Information Technologies Pvt Ltd would not be responsible for any losses caused based on the article. The author and is family do not hold shares in all of the above mentioned companies.