This Stock Is Available With A Dividend Of 800% And Is A Good Value Stock To Buy

Markets have been increasingly volatile over the last few weeks and every rally is being solid into at higher levels. However, if you are a long-term investor, here is a good value stock that you can buy.

Swaraj Engines: Strong on dividends and yields

Swaraj Engines was promoted by erstwhile Punjab Tractors Limited and Kirloskar Oil Engines Ltd. in 1985. The company is into manufacturing and supplying of diesel Engines in the range of 22 HP to above 65 HP. The company is equipped with highly productive & precise quality analyzing machines. It is also manufacturing hi-tech engine components. Swaraj Engines has been very consistent in terms of its profitability and dividends. In fact, the company this year has declared a dividend of 800% or Rs 80 per share, which on a current market price of Rs 1500, takes the dividend yield to 5.33%. The Register of Members and Share Transfer Books of the Company will remain closed from 2nd July, 2022 to 8th July, 2022 for the purpose of determining the Members eligible to receive the dividend. So, if you are planning to buy the shares for dividends, you need to keep the above book closure dates in mind.

Swaraj Engines: Good value stock to pick

In terms of fundamentals too, the stock of Swaraj Engines is pretty good. The company is a debt free company, with good liquidity. Swaraj Engines is not only net cash positive b/s;, but has a consistent cash flow generation. It is also highly capital efficient player with history of >30% return ratios & high dividend pay-outs.

ICICI Direct in its recent report has set a target price of Rs 1680 on the stock. "Play on farm mechanisation courtesy 33% volume share of M&M's tractor sales via Swaraj brand. Beneficiary of normal to positive monsoons," the brokerage has said in its recent report. The shares of Swaraj Engines has fallen from levels of Rs 1989 to the current levels of Rs 1500. Long term investors can buy the stock for its steady dividends.

Avoid investing lumpsum in the stock

ICICI Direct has maintained a hold rating tracking muted growth prospects in tractor space on high base of FY21 amid high dividend payout & resulting yields (5%). According to the firm, Sales, net profits are likely to grow at 10%, 11.5% CAGR, respectively, over FY21-24E, building in 6.6% volume compounded annual growth rate.

Whether you are buying the stock of Swaraj Engines or any other stock, we would recommend buying in small quantities. Markets are highly volatile and are vulnerable to selling pressure at higher levels. Look for stocks that offer good dividend yields. Also, debt free stocks like Swaraj Engines would gain, given that interest rates are headed higher. While we are suggesting buying stocks, we recommend buying small quantities through systematic plans, rather than large quantities. Also, holding for the longer term can ensure that you make money. For example, Swaraj Engines stock has delivered handsome returns to investors over the last 7 to 10 years. So, buy into value stocks, keeping a long term view.