Year Ender 2023: Large Cap Vs PSU vs Mid/Small Cap; Top Dividend Yield Stocks In 2023

Stocks With Highest Dividend Yield: Vedanta Ltd, Hindustan Zinc Ltd, Coal India Limited, Power Grid Corporation of India Ltd, and Bharat Petroleum Corporation Ltd; are the top large-cap dividend yield stocks in this year so far, according to Axis Securities' monthly report dated December 19, 2023.

Meanwhile, the top 5 PSU stocks with the highest dividend yield include; Coal India Ltd, Balmer Lawrie Investment Ltd, Indian Oil Corporation Ltd, Power Grid Corporation of India Ltd, and Oil India Ltd. This list shows that the dividend yield of companies operating in the metals and minerals sector and Oil and gas sector is the highest.

Before we get into details of these companies, let us first know what is dividend yield and why it is one factor that should be considered when adding any stock to your investment portfolio.

The dividend yield refers to a financial ratio (dividend/price) that indicates how much a company pays out to its shareholders in the form of dividends annually compared to its stock price. A company that pays regular dividends is counted as mature with sound fundamentals. However, this is not always true because higher dividend yields do not always indicate attractive investment opportunities as a stock's dividend yield may also be elevated due to declining stock price.

The formula to calculate dividend yield is Annual Dividends Per Share/Price per share.

The dividend yield generally gives you an estimate of a dividend-only return on a stock investment. In a situation when a dividend is not increased or decreased, the yield will go up when there is a decline in a stock's share price. Conversely, the yield will fall when the price of the stock moves northward. Since dividend yields change vis-a-vis the stock price, it can often look unusually high for stocks that are seeing a quick decline in value.

Top 15 Dividend Yield Companies (Large Cap):

Vedanta Ltd:

Dividend Yield (In past 12 months) - 20%

On December 12, the mining major Vedanta Ltd approved the second interim dividend of Rs 11 per equity share. The dividend is equivalent to 1100% on the face value of Rs 1/- per equity share for the financial year 2023-24 which amounts to Rs 4,089 crore.

The dividend yield mentioned here was calculated before the company announced the second interim dividend on Monday.

About Vedanta Limited:

Vedanta Limited is one of the world's foremost natural resources conglomerates, with primary interests in aluminum, zinc-lead-silver, oil and gas, iron ore, steel, copper, power, ferroalloys, nickel, semiconductor, and glass. With world-class strategic assets based across India, South Africa, Namibia, and Liberia, we are rightly positioned to create long-term value with superior cash flows. Vedanta Limited is listed on the Bombay Stock Exchange and the National Stock Exchange.

Hindustan Zinc Ltd:

Dividend Yield (In past 12 months) - 17%

Hindustan Zinc is India's largest and the world's second-largest integrated zinc producer. With over 50 years of operational experience, we give the highest priority to the safety of our people and the conservation of scarce natural resources through technology and innovation.

With a total R&R base of 460.1 million tonnes and an average zinc-lead grade of 6.8%, our mine life is over 25 years. Our fully integrated zinc operations currently hold around 80% market share in India's primary zinc industry. We are the 5th largest silver producer globally with an annual capacity of 800 MT.

Hindustan Zinc's operations comprise lead-zinc mines, hydrometallurgical zinc smelters, lead smelters, pyro metallurgical lead-zinc smelters as well as sulphuric acid and captive power plants in northwest India. Total metal production capacity is 1.123 Mt. We have facilities located in 5 districts of Rajasthan which include Udaipur, Chittorgarh, Bhilwara, Rajsamand, and Ajmer along with 1 district of Uttarakhand.

The facilities include Zawar Group of Mines, Rajpura Dariba Mine, Sindesar Khurd Mine, Rampura Agucha Mine, and Kayad Mine along with zinc-lead processing facilities which include a smelter at Debari, Chanderiya, and Dariba and a silver refinery at Pantnagar in Uttarakhand.

Coal India Ltd:

Dividend Yield (In past 12 months) - 7%

Coal India Limited (CIL) the state-owned coal mining corporate came into being in November 1975. With a modest production of 79 Million Tonnes (MTs) at the year of its inception CIL today is the single largest coal producer in the world and one of the largest corporate employers with a manpower of 272445 (as on 1st April, 2020). CIL functions through its subsidiaries in 84 mining areas spread over eight (8) states of India. Coal India Limited has 352 mines (as on 1st April, 2020) of which 158 are underground, 174 are opencast and 20 are mixed mines.

CIL further operates 12 coal washeries, (10 coking coal and 2 non-coking coal) and also manages other establishments like workshops, hospitals, and so on. CIL has 26 training Institutes and 84 Vocational Training Centres. Indian Institute of Coal Management (IICM) as a state-of-the-art Management Training 'Centre of Excellence' - the largest Corporate Training Institute in India - operates under CIL and conducts multi-disciplinary programs.

CIL is a Maharatna company - a privileged status conferred by the Government of India to select state-owned enterprises in order to empower them to expand their operations and emerge as global giants. The select club has only ten members out of more than three hundred Central Public Sector Enterprises in the country.

Indian Oil Corporation Ltd (IOCL)

Dividend Yield (In past 12 months) - 6%

IndianOil is a diversified, integrated energy major with a presence in almost all the streams of oil, gas, petrochemicals, and alternative energy sources; a world of high-caliber people, state-of-the-art technologies and cutting-edge R&D; a world of best practices, quality-consciousness and transparency; and a world where energy in all its forms is tapped most responsibly and delivered to the consumers most affordably. IndianOil recorded Revenue from Operations of Rs 9,34,953 Crores and a net profit of Rs 8,242 Crores for the financial year 2022-23.

Power Grid Corporation of India Ltd

Dividend Yield (In past 12 months) - 6%

Power Grid Corporation of India Limited (POWERGRID), a Schedule 'A', 'Maharatna ' Company operating under the Ministry of Power, is engaged in the bulk transmission of power through its EHVAC (up to 765 kV level) and HVDC transmission network. POWERGRID is a listed Company, with 51.34% holding by the Government of India and the balance by Institutional Investors & public.

POWERGRID, as of 30 September 2023, owns & operates around 176,180ckm of Extra High Voltage (EHV) transmission lines spread over the length and breadth of the country and 275 EHV AC & HVDC Sub-stations with transformation capacity of more than 512,601MVA. The availability of this huge transmission network is consistently maintained at over 99% through the deployment of state-of-the-art operation & maintenance techniques at par with global standards.

During FY 2022-23, POWERGRID achieved a turnover of about Rs. 46,605 crore and a Net Profit of Rs. 15,417 crores. As of 31.03.2023 Gross Fixed Assets of the company have also grown to Rs. 2,70,108 crore.

POWERGRID being one of the largest transmission utilities in the world, is playing a strategic role in the development of the Indian power sector and has proved its capabilities through timely execution of large & critical transmission projects. A strong and vibrant National Grid has already been established in the country and is being continuously augmented/strengthened to facilitate growing power transmission requirements with reliability. The present Inter-Regional power transfer capacity of the National Grid is about 112,250 MW.

The company has played a significant role in carrying forward the distribution reforms by undertaking Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS) works on behalf of the Govt. of India in the country.

Top 15 Dividend Yield Companies (PSU Stocks)

1. Coal India (Industry - Metals & min) Dividend Yield - 7%
2. Balmer Lawrie Investment Ltd (Industry - Financials) Dividend Yield - 7%
3. Indian Oil Corporation Ltd (Industry - Oil & Gas) Dividend Yield - 6%
4. Power Grid Corporation of India Ltd (Industry - Utilities) Dividend Yield - 6%
5. Oil India Ltd (Industry - Oil & Gas) Dividend Yield - 6%

Top 15 Dividend Yield Companies (Mid Cap)

1. Oil India Ltd (Industry - Oil & gas) Dividend Yield - 6%
2. Oracle Financial Services Software Ltd (Industry - IT) Dividend Yield - 5%
3. National Aluminium Company Ltd (Industry - Metals & min) Dividend Yield - 5%
4. Sanofi India Ltd (Industry - Healthcare ) Dividend Yield - 5%
5. Petronet LNG Ltd (Industry - Oil & gas) Dividend Yield - 5%

Top 15 Dividend Yield Companies (Small Cap)

1. T.V. Today Network Ltd (Industry - Tele & Media ) Dividend Yield - 33%
2. Bhansali Engineering Polymers Ltd ( Industry - Oil & gas) Dividend Yield - 16%
3. Xchanging Solutions Ltd (Industry - IT) Dividend Yield - 13%
4. IDFC Ltd (Industry - Financials) Dividend Yield - 9%
5. Balmer Lawrie Investment Ltd (Industry - Financials) Dividend Yield - 7%

Dividend Yields should not be only criteria to invest in stocks, here's why:

Though high dividend yields are attractive, that does not guarantee that it is a safe investment as they may be at the cost of the potential growth of the company. High yields can sometimes also indicate that every rupee a company is paying to its shareholders in the form of a dividend is a rupee that it is not reinvesting in its growth or generating additional income.

Even without dividends, shareholders can earn higher returns if the price of their stock increases with time as the company grows. It is advisable investors should not just invest in a stock by looking at its dividend yield but should also look at other factors like the company's balance sheet, business model, fundamentals, past history of dividend payments, P/E ratio, etc.