Why High Dividend Yield Stocks Matter
High Dividend Yield PSU Stocks – When it comes to investing on the basis of high dividend yield, it is PSU stocks that have topped the list. But then came the rally in the PSU space and it was not about dividend yield, but capital gains. But the fact is that dividend yield will act as cushion as investors chase capital gains.
A stock which is currently available at a dividend yield of close to 5% is not bad for an investor who is keen to have some margin of safety at a time when valuations are high across the board. The reason: When a correction takes place and the dividend yield of the stock goes above 7%, there is a high probability that some dividend-focused institutional investors will pick it up.
The reason why it is important to have these stocks on a watchlist is that when the markets are volatile, even the best minds get swayed by news flashes. So stocks where one has done some research helps in making more rational decisions.
An argument could be made against investing in these stocks at a time the markets are largely bullish and there are opportunities in specific pockets.
The counter-argument is that given the dividend paying record of these companies, and the fact that valuations are high, it would be more prudent to put fresh money into stocks which have a higher probability of outperforming a bearish market. Why? Because it is the cushion of dividend yield that brought long-term investors into these stocks.
Another thing to remember: Dividend payment is not only a function of how much money a company is making. It is also a habit of the management, or its intent. There are many companies which are sitting on huge cash piles but their dividend-payout ratio is low.
Except in one case, where dividend payment was missed for just one year, all others on our list today have been paying regularly. And the possibility of these companies continuing to pay dividends in the future is reasonably high. They are available at a decent dividend yield of 4 to 8%.
If you are considering investing in this combination, the key question is: Do you possess the patience required to navigate the relationship between dividend yield, wealth protection, and long-term prospects? If the answer is no, then it is best to avoid attempting it altogether.
Furthermore, many of these companies are venturing into new energy sectors, which demand significant investments. Fortunately, these companies have the financial capacity to support such endeavors. Consequently, there is a chance that some of them may experience a re-rating as these ventures mature.
Our analysis is based on the comprehensive research reports provided by Stock Reports Plus, powered by Refinitiv, focusing on high dividend-yielding stocks. These reports conduct thorough quantitative analyses to produce standardized scores.
The average of these scores is then distributed normally to determine an overall score. This average score is derived from five key factors – earnings, fundamentals, relative valuation, risk, and price momentum.
Each stock is assigned a ranking on a scale of 1 to 10. Scores of 8 to 10 are deemed positive, 4 to 7 are considered neutral, and 1 to 3 receive a negative outlook. For this report, we have specifically selected NSE stocks that have received a neutral to positive outlook from a group of reputable analysts.
High Dividend Yield PSU Stocks – About Companies
Indian Oil Corporation Limited is a leading oil company with a diverse range of business segments including Petroleum Products, Petrochemicals, and Other Business Activities. The Other Business Activities segment encompasses gas, oil and gas exploration, explosives and cryogenic business, as well as wind mill and solar power generation. The company’s operations cover the entire hydrocarbon value chain, from refining, pipeline transportation, and marketing, to exploration and production of crude oil and gas, petrochemicals, gas marketing, alternative energy sources, and global downstream operations.
Indian Oil Corporation Limited boasts a vast network of fuel stations, bulk storage terminals, inland depots, aviation fuel stations, liquefied petroleum gas (LPG) bottling plants, and lube blending plants. Additionally, the company has established 257 electric vehicle (EV) charging stations and 29 battery swapping stations at its energy pumps nationwide. With ownership and operation of nine refineries across India, Indian Oil Corporation Limited is a key player in the oil and gas industry.
Coal lndia Limited on the other hand, is a prominent coal mining company primarily focused on mining and producing coal, as well as operating coal washeries. The company offers a wide range of coal products including Coking Coal, Semi Coking Coal, Non-Coking Coal, Washed and Beneficiated Coal, Middlings, Rejects, Coal Fines/Coke Fines, CIL Coke / LTC Coke, and Tar/Heavy Oil/Light Oil/Soft Pitch.
These products cater to various industries such as steel making, metallurgical industries, power generation, cement, fertilizer, glass, ceramic, paper, chemical, brick manufacturing, and other heating purposes.
With subsidiaries operating in approximately 85 mining areas across eight states in India, Coal India Limited plays a crucial role in the coal mining sector.
Bharat Petroleum Corporation Limited is a leading company in the refining of crude oil and marketing of petroleum products. The company offers a wide range of products, including petrol, diesel, automotive liquefied petroleum gas (LPG), and compressed natural gas (CNG).
Their business encompasses various fuel services such as SmartFleet, Speed 97, UFill, PetroCard, SmartDrive, and FuelKart. Additionally, Bharatgas provides comprehensive solutions for both domestic and commercial customers. MAK Lubricants offers a variety of automobile lubricants for bikes, scooters, auto and CNG vehicles, trucks and buses, agriculture, grease, and marine boats.
The company’s Aviation services division is responsible for producing jet fuel at refineries. They operate several refineries, including the Mumbai Refinery, Kochi Refinery, and Bina Refinery. In terms of gas, they deal with Natural Gas, and their International Trade division manages imports such as Gasoline, Base Oils, Bitumen, and Petrochemicals, as well as exports on a free on board (FOB) and cost and freight (CFR) basis.
Oil and Natural Gas Corporation Limited is primarily focused on the exploration, development, and production of crude oil, natural gas, and value-added products. Their operations are divided into Exploration and Production, as well as Refining and Marketing. Geographically, they operate both in India (Onshore and Offshore) and Outside India.
The company is actively acquiring oil and gas acreages outside India for exploration, development, and production, as well as engaging in downstream activities such as refining and marketing of petroleum products, petrochemicals, power generation, LNG supply, pipeline transportation, SEZ development, and helicopter services. They are involved in offshore extraction of crude petroleum, natural gas, and related services.
Subsidiaries of Oil and Natural Gas Corporation Limited include Mangalore Refinery and Petrochemicals Limited, ONGC
Hindustan Petroleum Corporation Limited is a leading company in the refining of crude oil and marketing of petroleum products, as well as the production of hydrocarbons and management of exploration and production (E&P) blocks. The company is also involved in the generation of power and the operation of a liquefied natural gas (LNG) regasification terminal that is currently under construction.
The company’s operations are divided into two main segments. The Downstream Petroleum segment focuses on the refining and marketing of petroleum products. The All Other Segments include E&P of hydrocarbons, as well as the manufacturing of sugar and ethanol.
Hindustan Petroleum Corporation Limited has a diverse range of businesses, including HP refineries, HP retail (petrol bunk), HP Gas (LPG), HP lubricants, HP aviation, HP direct sales, HP projects and pipeline, HP supplies, operations, and distribution, HP international trade, HP natural gas and renewables, HP petrochemicals, and HP research and development.
The company exports various petroleum products from its refineries, such as fuel oil, naphtha, high sulfur gasoil, and high sulfur gasoline.
For more market insights, follow our blog.
Stay tuned for more updates and insights on the stock market! For more insights on investing in the Indian stock market, check out resource like NSE India.
Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.