Investors seeking passive and stable income, along with capital appreciation and wealth creation, go big on dividend-yielding stocks. Certain counters are considered boring plays as they take a long time to move higher and dividend pay also affects their stock prices. However, the investor's return to investors remains strong in the long term.
In addition to PSUs, shares of public sector enterprises PSUs are viewed as a substantial dividend play, while choosing other players from other sectors such as mining and healthcare give a handsome dividend to the investors.
Religare Broking has filtered out 10 high dividend-yielding stocks from the PSU space, with Steel Authority of India SAIL NMDC and Indian Oil Corporation having a dividend yield exceeding 10 per cent.
Axis Securities remains positive at SAIL despite the company performance in Q 4 to be decent, while BOB Capital and Antique Stock broking have 'hold' ratings for the stock, with a target price of 90 and 92.
ICICI Securities, Motilal Oswal and Sharekhan have a buy rating on NMDC with a target price of Rs 118, Rs 135 and Rs 125 respectively. On the other hand, B&K Securities and Elara Capital have purchased Oil India Corporation for a target price of 109, and 100, respectively.
The dividend yield is an important factor to consider when investing in dividend-paying stocks. Investors are earning on shares, and it is an indicator of the returns that investors are making. Investors, interested in dividend income, can consider these stocks for investment, said Religare Broking, head of research at the University of California's Center for Economic Intelligence.
Other PSU stocks selected by Religare include GAIL India, National Aluminium Company, Coal India, Oil Natural Gas Corporation, Power Finance Corporation of India and Hindustan Zinc, among other dividend-yielding stocks. The brokerage viewed Swaraj Engines as a high dividend stock with a yield of 10.4 per cent.
However, the brokerage considered only those companies with a market capitalisation of more than Rs 800 crore and the company should be profiting for the past 3 years, five-year average ROE should be more than 9. It did not consider special dividends a one-off, while consistent Special dividends are considered.
In March, Axis Securities reported that Vedanta was the best dividend-paying stock, followed by Hindustan Zinc. The stock has a dividend pay of 36.26 per cent and 24.62 per cent, respectively.