Highest Dividend Paying Stocks in India 2024

Dividends are one of the most important sources of income that an investor earns from the stock market. However, some companies are known to pay high dividends making them one of the most sought after stocks because of this. In this article, we will be taking a look at the top highest dividend paying stocks in India. Keep reading to find out!

What is Dividend Paying Stocks? 

A dividend refers to the distribution of profits earned by the company to its equity shareholders in the form of cash or stock reinvestment. A stock is known as a dividend-paying stock if it has consistently paid out dividends over the last few years and at the same time, it also maintains a healthy dividend yield. 

However, not every company that makes a profit pays out dividends. Here the decision on whether the company must pay profits or not lies with the board of directors. Some companies prefer to reinvest their profits into the business and use this for their growth. This is a trend generally observed in the mid and small-cap cap segments. Larger companies generally tend to focus on paying out dividends consistently.

What are the Ratios to Analyse Dividend Stocks?

The two important ratios that help us analyse a dividend-paying stock are the Dividend Yield and the Dividend Payout Ratio. Dividend Yield is a percentage that shows how much income an investor would earn in dividend payout per year for every rupee invested. A higher ratio means the company pays a high dividend to its shareholders.

The Dividend Payout Ratio refers to the portion of the total profits that are being paid out to shareholders as dividends. Generally, a healthy mix is preferred where the company balances both, the payment as dividends and withholding some of the profits for reinvestment. 

Apart from the dividend yield and dividend payout ratio, one should also look at how consistently the company has paid out dividends in the past and its overall financial health. 

Highest Dividend Paying Stocks in India

Here’s a closer look at the list of the highest dividend paying stocks in India:

1. Indian Oil Corporation

IOC is the largest refinery company in India. It owns 11 refineries across India with a total capacity of 80.60 MMTPA. The majority of India’s petroleum product consumption is currently handled by Indian Oil.

The company’s current market capitalization is Rs 2,41,261 crore. The stock P/E ratio is 5.5%, which is lower than the industry P/E of 14.42%. This shows that the IOC share price is undervalued at current levels. The current dividend yield is 7.04%, and the company maintains a healthy dividend payout of 46.4%.

2. Coal India Limited

Coal India was established in November 1975. It is an Indian state-owned coal mining and refining company. It is the world’s largest government-owned coal producer. The company is headquartered in Kolkata.

Coal India Limited provides a high dividend yield of 4.98% and maintains a healthy dividend payout of 42%. The company has a market cap of Rs 300,371 crore and has delivered a good profit growth of 16% CAGR over the last 5 years.

Coal India’s compounded sales growth stood at 16% over the last 5 years. The company is debt-free and reported a net profit of Rs 28,125 crore for the year ending on 31 March 2023.

3. ONGC Limited

ONGC was established on August 14, 1956, by the Government of India. It is India’s largest oil and gas exploration and production company. Approximately 70% of India’s domestic crude oil production and 84% of the nation’s natural gas production are produced by this company.

ONGC Limited’s current market capitalization is Rs 3,46,272 crore. ONGC had a reasonable dividend yield of 4.08% and maintained a high dividend payout of 31.3%. It showed a profit growth of 10% CAGR and sales growth of 9% CAGR over the last 5 years.

4. Castrol India

Castrol India Limited manufactures lubricants for industrial and automotive use. Castrol India holds a 20% market share in the Indian lubricant market overall and is the country’s second-largest producer of industrial and automotive lubricants.

Castrol India delivered sales growth of 19% CAGR and profit growth of 14% CAGR over the past 3 years. Stock’s current dividend yield is 3.68% and the dividend payout ratio is 85.8%. The company has a good dividend track record, it has consistently declared a dividend every year.

5. HCL Technologies

HCL Technology is a multinational information technology services company headquartered in Noida. The company offers solutions in IT infrastructure, digital operations, cloud services, cybersecurity, analytics, IoT, and software services.

HCL Technologies, ranked among the top five Indian IT companies, has delivered a sales growth of 13% CAGR and profit growth of 13% CAGR in the last 3 years. The stock’s current dividend yield is 3.63% and the dividend payout is 89.9%. The company has declared dividends consistently in the past 5 years.

6. Power Grid Corporation

Power Grid Corporation of India Limited (PGCIL), is a state-owned electric utility company. Its primary activity is the transmission of bulk power between India’s various states. Its head office is located in Gurugram.

Power Grid Corporation is India’s largest electricity generation company. Its market capitalization is Rs 2,99,293 crore, and its stock price is trading near its 52-week high. The company provides an attractive dividend yield of 3.44% and has maintained a healthy dividend payout of 67.2%.

7. ITC

ITC Limited is one of the biggest conglomerate companies in India. It was founded in 1910. It has expanded into a number of industries, such as food processing, retail, financial services, and tobacco manufacturing.

ITC Limited, the leading multi-business enterprise delivered a sales growth of 13% CAGR and a profit growth of 16% CAGR in the last 3 years. The stock’s current dividend yield is 3.19% and the dividend payout is 83.9%. The stock’s price has grown 16% CAGR in the last 3 years. ITC Ltd has a consistent track record of paying dividends.

8. Tech Mahindra

Tech Mahindra is an IT services and consulting firm that offers solutions that combine cutting-edge digital innovation with reliable, well-established industry procedures. It has operations in more than 90 companies. 

Mahindra group company Tech Mahindra delivered sales growth of 11% CAGR in the past 3 years whereas its profit growth for the same period came down by 18% CAGR. The stock’s current dividend yield is 2.92% and the dividend payout has been over 40% for the last 4 years. The company’s share price grew at 12% CAGR and the company has paid dividends consistently for the past 5 years.

9. Oil India Limited

Oil India Limited (OIL) is a fully integrated exploration and production company operating in the upstream sector of the economy. It is a public sector undertaking set up in 1858.

Oil India Limited has delivered a good profit growth of 21% CAGR over the last three years. The current dividend yield is 2.86%, and it maintains a healthy dividend payout of 27%. The stock P/E is 9.26, and debt-equity is 0.56%.

10. Oracle Financial Services Software Ltd

Oracle Financial Services Software Ltd company offers services in the areas of risk and compliance, retail banking, corporate banking, wealth management, capital markets, and payments. Oracle Financial Services has delivered a sales growth of 9% CAGR and a profit growth of 8% CAGR over the last 3 years. The stock’s current dividend yield is 3.11% and the dividend payout is 93.7%.

The stock’s P/E is 29.8 as against sector P/E of 31.33. The stock price has grown at 29% CAGR in the last 3 years. The company has declared dividends consistently in the last 5 years. The company is almost debt-free with a good 3-year ROE of 27%. 

Conclusion

Investing in dividend-paying stocks creates an opportunity for an extra source of income. However, it is very important that you carefully analyse the dividend history of the company and its ratio’s over the years before selecting a dividend stock. The stocks that have high dividend yields and a proven track record of paying dividends consistently are discussed above. These include some of the highest dividend paying stocks in India. Rupeezy App and website allow you to invest in such stocks and analyse them quickly. Click here to open a Demat account with Rupeezy. Happy Investing!