We are currently in a bear market due to coronavirus. Stocks are trading at multi-year lows. The dividend is something that provides a cushion to the fall. There are many stocks at the current level which are trading at a dividend yield higher than bank fixed deposits.
While checking the dividend factor, we need to make sure whether the company will be able to continue paying this high dividend or not as everyone’s business is affected by the coronavirus.
That is why I have included only the debt-free companies here who have decent cash on their balance sheet. You can check more on how to find the right dividend company from this video. Another important factor that has been taken into consideration is the growth of the share prices. That way, not only will you earn from dividend, but also growth of your capital invested.
The prices mentioned below are as on 14th April, 2020.
#1 Coal India: CMP 145
Coal India is the world’s largest coal company. This company currently has INR 29500 crore cash on its balance sheet and is currently trading at a dividend yield of 9.3%. 70% of its customers are power companies and rest others are steel cement and fertilizer companies.
#2 NTPC: CMP 88
This is India’s largest power company currently trading at a dividend yield of 7%. The company has recently added 2500 MW of hydropower capacity. Which should increase its earnings per share in the coming years.
#3 SJVN: CMP 21.5
SJVN is a Mini Ratna PSU company with a joint venture of Government of India and Government of Himachal Pradesh. It mainly deals with hydropower.
Stock is currently trading at a dividend yield of 9.93%. It’s a debt-free company with INR 3200 crore cash on its balance sheet. We recommended our course subscribers to buy at Rs. 17.8
#4 NMDC: CMP 82
NMDC is one of the largest and low-cost producers of Iron Ore in the world. Currently trading at a dividend yield of 6.8%. It’s a debt-free company with close to INR 4000 crore cash on its balance sheet. We recommended our course subscribers to buy at Rs. 73.
#5 Hindustan Aeronautics Limited: CMP 560
It is a PSU company that deals in defense and manufactures aircraft. The company is expected to get an order for 83 Tejas MK1A fighter aircraft. The company is also developing an MK2 variant of the same aircraft. Also, helicopter projects like LCA LCH are in good demand. This gives the revenue visibility. It is also a debt free company currently available at a dividend yield of close to 6%.
Over to You
You will obviously find a few more companies giving more dividend yield than the ones listed above; like Sonata Software (11%), Oil India (11%), Vedanta (25%), but these are not cash surplus and have debt on them.
Hence, there is a high possibility of them not declaring any dividends for last year at all if you’re only going to buy them for dividend.
If you have any questions about this article, do let us know in the comments below. This list is by no means a buy/sell recommendation. Please do your own research before making any trades*.
Abhishek is an Engineer MBA in Finance and Certified Research Analyst. He is an active trader and investor in the stock market since 2010. Follower of the philosophies of Warren Buffet and Peter Lynch in investing and trend following in trading.