If you are looking to buy stocks that are undervalued and offer you regular dividend yields than a few stocks like PFC and REC are good bets. In fact, REC offers a dividend yield of more than 10%. Let's take a look at both these companies.
Rural Electrification Corporation (REC)
Rural Electrification Corporation or REC is a government of India owned enterprise. For the year ending March 2021 Rural Electrification Corporation declared an equity dividend of 127.10% amounting to Rs 12.71 per share. At the current share price of Rs 123 it results in a dividend yield of 10.34%
Now, the one thing is that to note when buying stocks, if there has been a one-off dividend from sale of assets etc. However, in the case of REC this is not the case. The company is a regular dividend paying company and we do not foresee the possibility of dividends being reduced. The company is a good profit making company and largely caters to financing large infra and power projects. The shares of REC have fallen from levels of Rs 168 to the current levels of Rs 122. At these levels the stock is a good buy for its dividend yields. These days even bank deposits do not fetch such high returns. The stock of REC is also trading at p/e levels of 2.47 times, which is low and one more reason to buy the stock.
Power Finance Corporation good on dividend yields
This is another stock that is attractive for dividend yields and along with a low p/e, the stock becomes an interesting pick. The stock of PFC offers a dividend yield of 8.85% at the current market price 112. This is a company that is again owned by the Government of India and offers power finance. The shares of the company are available at a trailing p/e of 3 times. The shares of PFC have hit a 52-week high of Rs 153 and a 52-week low of Rs 104. The stock has also fallen significantly from its high levels, thus making it an attractive once again for long-term investors, who want to buy into the stock.
We believe that the company would continue to maintain its dividends as it has been having steady profitability over the years. Retired individuals and investors looking for regular income by way of dividends can this buy the stock of PFC. The downside risks to the stock are also limited given the dividend yield.