6 High Dividend Yield Blue Chip Stocks

High dividend yield safe stocks

Investors looking for blue chip stocks with high dividend yield have a lot to choose from.

There is a recent list of six blue chip stocks which have been identified by moneycontrol.com.

The six stocks offer a high dividend yield of as much as 7%, which is very attractive.

The six stocks are all PSU companies which means that they are safe and the return of capital is assured.

6 High Dividend Yield Blue Chip Stocks
Company

Current
market
price (Rs)

Dividend Yield (%) PE FY19E (x) Cash equivalent
(Rs crore)
Cash as % of market cap Market cap (Rs crore)
Cochin Shipyard 371 4 12 3,000 59 5,050
GMDC 87 4 6 1,100 40 2,775
Engineers India 106 4 18 2,537 38 6,727
NLC India 81 6 5 368   12,435
IRCON International 360 5 8 1,800 53 3,376
Coal India 275 7 12 31,475 18 1,71,000




It is worth noting that each of the six high dividend yield stocks is quoting at a reasonable P/E ranging from 5x to 18x.

Also, the blue chip PSU stocks have huge amounts of cash on their books.

In fact, the cash as a percentage of the market capitalisation is as much as 59%.

This clearly means that the blue chip stocks will have no difficulty in maintaining their high dividend yields.

The following is the commentary given in moneycontrol.com on each of the 6 high dividend yield stocks:

(1) Cochin Shipyard

Among shipyards, Cochin Shipyard has strong execution capability and a superior capital allocation policy. It’s a debt-free company. Adjusting for cash on its books to the tune of Rs 3,000 crore, which is almost equal to its networth and 59 percent of its current market capitalisation, core RoE is much better. The company is sitting on an order book of close to Rs 12,000 crore, or about 6.7 times its sales, providing decent revenue visibility even if one assumes a slight slowdown in defence deliveries. The stock is trading at 12 times FY19 estimated earnings, offering a dividend yield of close to 4 percent.

(2) Gujarat Mineral Development Corporation (GMDC)

State-owned GMDC, which is into lignite mining and power generation, has corrected over 40 percent from its 52-week high. The company is sitting on a net cash of close to Rs 1,100 crore on a mcap of Rs 2,775 crore. Higher realisation, better volume growth in the lignite segment and improvement in the power businesses should ensure higher earnings and cash on its books. At the current market price, the stock is trading at six times its FY19 estimated earnings, offering a dividend yield of 4 percent.

(3) Engineers India

Pick up in hydrocarbon capex in India and globally would bode well for Engineers India. Over the next two years, led by strong order book (Rs 7,800 crore or about four times its annual sales), the company is expected to report 15-17 percent annual earnings. The stock has corrected 45 percent from its 2018 high and currently trades at an attractive dividend yield (4 percent) and 15 times its FY20 estimated earnings.

(4) NLC India

NLC India, formerly known as Neyveli Lignite Corporation, is probably the only state-run entity that has announced a buyback of its shares, indicating extreme confident by the management about future growth. The company is into power generation, generating annual cash flows of about Rs 1,000 crore, which is redeployed to expanding capacity. It recently added about 1,000 mw of new capacity, which will take care of near term growth.
At the current price, the stock offers a dividend yield of close to 6 percent and trades at an attractive valuation of 5 times FY19 estimated earnings.

(5) IRCON International

The recently listed IRCON International, which is into railway projects, is a fast growing public sector enterprise with an order book of close to Rs 22,400 crore, or about 5.6 times its FY18 revenue. At the current market price, the stock is trading at less than 8 times its FY19 estimated earnings, offering a dividend yield close to 5 percent. Valuations are quite attractive, considering growth visibility, cash on the books and high RoE of about 23 percent.

(6) Coal India

The Coal India counter has not corrected much in the recent correction, which is more to do with growth expectations, led by higher realisations and volume growth. Most of its past issues such as evacuation challenges and wages revision are now easing. It’s a debt free company sitting on a cash equivalent of about Rs 31,400 crore. The stock currently trades around 12 times its FY19 estimated earnings, offering a dividend yield of about 7 percent.

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Other top dividend-paying PSU stocks in India

Earlier, the FE had identified the best dividend paying PSU stocks in India.

8 government companies giving up to 13% dividend yield were cherry picked as being worthy of investment.

The best dividend paying PSU stocks in India offered as much as 13% dividend yield on the basis of dividend declared during the financial year 2017-2018.

Indian Oil Corporation: India’s largest PSE (Public Sector Enterprise) by turnover and the biggest oil marketer Indian Oil Corporation (IOC) has declared a dividend of Rs 21 for the financial year 2017-2018. With a collective dividend of Rs 21, IOC has a dividend yield of 13.58% at the current market price of Rs 154.6 on BSE.

Other best dividend-paying PSU companies in India include Power Finance Corporation, Rural Electrification Corporation, National Aluminium Company, SJVN, Oil India, Hindustan Petroleum Corporation and Chennai Petroleum Corporation.

Other top dividend-paying PSU stocks in India

Stock CMP (Rs) FY18 Dividend (Rs) Dividend Yield
PFC 85.25 7.8 9.15%
REC 119.30 11.8 9.89%
Nalco 76.05 11.4 14.99%
SJVN 27.95 2.1 7.51%
Oil India 213.75 15 7.02%
HPCL 253.10 17 6.72%
Chennai Petro 311.00 18.5 5.95%

It was also pointed out by FE that in absolute terms, Ingersoll Rand (India) declared a hefty dividend of Rs 205 for the financial year 2017-2018, one of the highest dividend declared per share among all the listed companies on Indian stock exchanges.

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Comments (6)

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  6. Ramkrishna

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    Reply

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