High Dividend Yield Stocks 2017

High Dividend Yield Stocks 2017

High dividend yield brings stability

In a strong equity market, where stocks are generating fabulous capital appreciation, the often-overlooked aspect is “Dividend”. Investing in stocks with healthy dividend yields and high dividend payouts is quite stable format of investing.

High dividend yield stocks are better than fixed deposits

In the current economy, where bank fixed deposits offer interest rates to the tune of 6-7%, there are stocks which are giving dividend yields similar to that. Further, the interest on bank fixed deposits is taxable whereas the dividend from equity is completely exempt from tax. In that context, post-tax dividend yields of some of the stocks is way higher than the post-tax interest yield on bank fixed deposits. So, investors can consider some of the high dividend yield stocks to bring in regular inflows.

Blue chip PSU stocks are the best dividend paying stocks

Broadly speaking, PSUs have been high dividend payers to address the fiscal deficit of the government to balance the tax collection shortfalls. Some of the stocks such as Coal India have seen huge dividend payouts over the years. Quarter 4 of the financial year traditionally provided maximum activity in terms of PSU dividends.




List of high dividend yield blue-chip PSU stocks

 

Dividend yield as of April 2017

NSE Symbol

CMP* (Rs.)

Dividend per share (Rs.)

Dividend Yield (%)

COALINDIA

279

19.9

6.8

HINDZINC

273

53.4

4.7

IVC

14

1.2

7.1

NHPC

31

2.3

7.1

NMDC

127

4.2

4.6

ONGC

181

7.4

3.9

OIL

333

15.5

4.4

PFC

156

5.3

4.2

RECLTD

195

9.6

4.7

SJVN

35

2.7

4.9

 

Average 6 year dividend yield

NSE Symbol

Sector

Market Cap (Rs. Mn)

Average 6 Yr Yield (%)

COALINDIA

Mining

1733419

6.6

HINDZINC

Metal & Mining

1153090

4.7

IVC

Financial Services

4538

7.1

NHPC

Utilities

344851

3.9

NMDC

Metal & Mining

401023

4.6

ONGC

Oil & Gas

2322174

3.9

OIL

Oil & Gas

266824

4.4

PFC

NBFC

410929

4.2

RECLTD

NBFC

385208

4.7

SJVN

Utilities

144782

4.9

Coal India Ltd

CMP (as on Apr 18, 2017)

279

Dividend/share

19.9

Dividend Yield (%)

6.8

 

Coal India Limited (CIL), Kolkata headquartered Maharatna company majorly owned and operated as state-owned enterprise, is the world’s largest coal mining company with 8 operating subsidiaries producing 84% of India’s coal and accounting for 53.4% of primary energy consumption of country. CIL operates 176 open cast mines, 207 underground mines and 33 mixed mines, a total of 413 mines producing 505 million tonnes (mt) of coal from open cast mines and 34mt of coal from underground mines which are backed with total reserves and recourses of close to 88.4 billion tonnes (bt) of coal apart from additional tentative reserves of 42.9bt from 119 mines allocated by GoI. CIL also operates 15 washeries comprising of 3 non-coking coal beneficiation facilities with feedstock capacity of 13.5mtpa, and 12 coking coal beneficiation facilities with feedstock capacity of 23.3mtpa. CIL produces coking & semi coking coal, non-coking coal, washed & beneficiated coal, middlings, rejects, coal & coke fines, heavy & light oil and soft pitch. CIL’s future plans include starting of 27 new washeries with 120.2mtpa capacity breaking into 18 coking washeries with 48.2mtpa capacity and 9 non-coking washeries with capacity of 75.5 mtpa.

Hindustan Zinc Ltd

CMP (as on Apr 18, 2017)

273

Dividend/share

53.4

Dividend Yield (%)

4.7

Hindustan Zinc Ltd (Hin Zinc), an erstwhile loss making PSU and now a subsidiary of Vedanta Resources PLC, is an integrated mining and recourses company engaged in mining and smelting activities producing ores and metals of various grades of zinc, lead, silver, cadmium and also owns mind mills; and is considered world’s second largest producer of Zinc. Hin Zinc has metal production capacity of over 1 million tonnes per annum (mtpa) with its key lead-zinc mines in Rampura Agucha and Sindesar Khurd, and smelting complexes in Chanderiya and Dariba, Rajasthan. Hin Zin owns aggregate mine resources of 107.1 mtpa and resources of 282.8mtpa of various grades of ores. The company at present operates 5 zinc-lead mines and a rock-phosphate mine. In terms of smelting capacity, it operates 823,000 tpa of zinc smelting capacity, 185,000 tpa of lead smelting capacity and 514tpa sliver smelting capacity spread over 5 zinc smelters, 2 lead smelter, a zinc-lead smelter, 2 silver refinery plants apart from 7 sulphuric acid plants and captive power plants with 474MW of installed capacity in Rajasthan and Uttarakhand. This is aided by aggregate wind mills capacity of over 274MW spread in the states of Rajasthan, Gujarat, Karnataka, Tamil Nadu and Maharashtra.

IL&FS Investment Managers Ltd

CMP (as on Apr 18, 2017)

14

Dividend/share

1.2

Dividend Yield (%)

7.1

IL&FS Investment Managers Ltd (IIML) founded as Credit Capital Venture Fund (India) Ltd, is a subsidiary of Infrastructure Leasing & Financial Services Ltd (IL&FS) and is one of the oldest and largest private equity fund managers in India with over US$3.2 bn Assets Under Management (AUM). IIML invests in technologically advance projects in sectors such as telecom, city gas distribution, shipyards apart from investing in India’s consumer spending sectors like retail and media as well. IIML investments are organised as verticals such as private equity, real estate, infrastructure and infrastructure trusts. IIML revenue model is a combination base revenues and investment gains; base revenues come in the form of annual management fees of 1.0%-1.5% charged during the life of a fund (ideally 6-10 years), and investment gains otherwise called as ‘Carry’ charged to investment profits @ 20% after a fixed hurdle rate in the range of 7.0%-10.0% with an investment time horizon of 4-7 years. Divested investments, realised gross IRR of ~21% and cash multiple of 1.8x. Notable exits include ABG Shipyard (67%, 4.0x), Continental Warehousing (28%, 2.9x), DQ Entertainment (34%, 3.4x), Futuresoft (88%, 2.9x), Godrej Beverages (54%, 1.6x), Hotel Leelaventures (95%, 2.4x), Indraprastha Gas (65%, 6.9x), Noida Toll Bridge(23%, 2.9x), Shoppers Stop (24%, 3.8x).

NHPC Ltd

CMP (as on Apr 18, 2017)

31

Dividend/share

2.3

Dividend Yield (%)

7.1

NHPC Ltd, erstwhile National Hydroelectric Power Corporation, is a Mini Ratna category-I enterprise of the Govt. of India engaged in power generation activity predominantly focusing on hydro power with 19 projects being operational under standalone entity with an installed capacity of 5067MW and design energy of 21339 Million Units(MU). NHPC, through its subsidiaries, operate 2 projects with installed capacity and design energy of 1520MW and 2579.60MU respectively. NHPC has expanded its operational areas beyond hydro power to solar, wind and thermal energy as well. 4 Hydro projects are under construction with aggregate capacity and design energy of 3210MW and 12240MU respectively. Projects awaiting clearance from agencies are for 5 projects at standalone entity for 4995MW capacity, 4 projects under JV route with 2934MW capacity and 1 project by subsidiary unit with 66MU capacity awaiting clearance. NHPC has added 3 projects in the pipeline with capacity of 1130MW. Under other renewable energy segment, NHPC is implementing 50MW of wind mill project in Rajasthan and another 84MW of wind mill is under consideration in Kerala. 1 solar project of 50MW and 1 thermal project through JV route with a capacity of 1320MW are under various stages of planning.

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NMDC Ltd

CMP (as on Apr 18, 2017)

127

Dividend/share

4.2

Dividend Yield (%)

4.6

NMDC Ltd is a state-owned Navratna company engaged in mining of minerals predominantly iron ore; apart from that, the company is engaged in production and sale of diamond, sponge iron and wind power. NMDC is considered as India’s largest iron ore producer and exporter producing about 30mtpa of iron ore from 3 fully mechanised mines in Chhattisgarh and Karnataka. The company also operates the only mechanised diamond mine in the country at Panna in Madhya Pradesh. NMDC’s projects under construction include Bailadila deposit, Kumaraswamy iron ore project, 1.2 million tons per annum (mtpa) pellet plant at Donimalai, 3mtpa integrated steel plant in Chhattisgarh, Panthal magnesite project, screening plant 3 at Kirandul complex, screening plant 2 at donimalai complex, doubling of railway line between Kirandul and Jagdalpur, Steel plant at Bellary and rail link between Dalli-Rajhara-Rowghat-Jagdalpur railway line project. It proposes to diversify into other mineral mining such as coking coal, manganese ore, nicke, rock phosphate potash and thermal coal. It also proposes to invest in raw materials such as tungsten and rare earth minerals through engaging in activities with Indian Rare Earth Metals Ltd.

Oil & Natural Gas Corp Ltd

CMP (as on Apr 18, 2017)

181

Dividend/share

7.4

Dividend Yield (%)

3.9

Oil and Natural Gas Corporation Ltd (ONGC) is a state-owned Maharatna company engaged in exploration, development and production of crude oil and natural gas in India, contributing around 70% of Indian domestic production. ONGC’s business segments include Exploration & Production (E&P), and Refining. In terms of geographic reach, operations are spread of in India, which includes onshore and offshore, and outside India. ONGC is India’s top energy company and ranks 20th among global energy majors. ONGC’s business areas include oil field services, transportation of oil and natural gas products, production of value-added products like LPG, naphtha, refining, petrochemicals, power, unconventional and alternate sources of energy. ONGC’s subsidiaries include ONGC Videsh Ltd (OVL), Mangalore Refinery and Petrochemicals Ltd (MRPL) and ONGC Mangalore Petrochemicals Ltd. OVL has interest in 36 oil and gas fields in 17 countries. MRPL, a Mini Ratna company, owns and operates a single-location refining capacity of 15 mtpa. With low crude oil prices, de-regulation of most fuel products and targeted subsidy schemes, ONGC’s subsidy burden has reduced significantly aiding profitability expansion and sustenance.

Oil India Ltd

CMP (as on Apr 18, 2017)

333

Dividend/share

15.5

Dividend Yield (%)

4.4

Oil India Ltd (OIL) is a state-owned vertically integrated Crude Oil & Natural Gas (O&G) Navratna company engaged in the business of exploration, development and production of O&G assets, transportation of crude oil & production of LPG. OIL also provides various E&P related services and holds 26% equity in Numaligarh Refinery Ltd. OIL produces about 9% of India’s total domestic O&G production. OIL’s in-house infrastructure allows for cost control and the assets include one 2D and two 3D seismic crew, 10 logging units, 20 drilling rigs, over 20 work-over rig, 70 production installations, 5,000 km O&G pipelines and ~1,50,000 kilo litres of crude storage. OIL operates 39 blocks of 23,722 sq.km domestic area and 15 International blocks spread over 77,972 sq.km of area. Domestic reserve base (2P) includes 80.74 Million Metric Tonnes (MMT) of oil and 119.45 Billion Cubic Meters (BCM) of gas reserves with reserve replacement ratio consistently well over 100% offers future cushion. With low crude oil prices, de-regulation of most fuel products and targeted subsidy schemes, OIL’s subsidy burden has reduced significantly aiding profitability expansion and sustenance.

Power Finance Corp Ltd

CMP (as on Apr 18, 2017)

156

Dividend/share

5.3

Dividend Yield (%)

4.2

Power Finance Corporation Ltd (PFC) is a state-owned Navratna non-banking financial company engaged in business of financing companies in power sector related activities, particularly generation activities. PFC offers fund-based and non fund-based financial assistance apart from offering consultancy and capital advisory services related to power sector financing. PFC generates resources majorly through domestic bonds (75%), internal accruals (18%), foreign currency loans (4%) and others (3%) leveling average costs funds at 8.43%. Loan assets composition breaks into activities like generation (75%), transmission (7%), distribution (3%) and others (16%) allowing for Net Interest Margin averaging to 4.85%. PFC generates best in class annualised Return on Assets (RoA) and Return on Equity (RoE) to the tune of 2.99% and 21.43% respectively. The company remains well capitalised with Capital Adequacy Ratio (CAR) at 20.41% spliting into Tier I of 17.14% and Tier II of 3.27%. Loan asset quality measured as a per cent of loan assets reached to 3.07% at gross level and 2.28% at net level. PFC also operates through subsidiaries such as PFC Consulting Ltd, PFC Green Energy Ltd and PFC Capital Advisory Services Ltd.

Rural Electrification Corp Ltd

CMP (as on Apr 18, 2017)

195

Dividend/share

9.6

Dividend Yield (%)

4.7

Rural Electrification Corp Ltd (REC) is a state-owned Navratna non-banking financial company engaged in business of financing companies in power sector related activities, particularly Transmission and Distribution (T&D) activities focusing on rural electrification. REC is the nodal agency for GoI’s programs like DDUGJY, UDAY, Power for All etc. REC had sanctioned ~580 T&D schemes, which include primary power evacuation associated with generating plants, system improvements, including feeder segregation, bulk loans, intensive electrification and pumpset energization schemes. Total loan outstanding stands at Rs.2.01trillion by 9MFY17 split between generation activity (45%), T&D activity (53%) and short term loans (2%). Aggregate loan book remains well diversified with top 10 borrowers accounting for ~39% of current loans and no single borrower group accounting for more than 7% of total loan book. Average maturity period for outstanding borrowings stands is ~4.12 years and average cost of funds stood at 8.12% with net interest margin reached to 3.27%. REC has one of the highest Capital Adequacy Ratio (CAR) at 21.3% splitting as Tier I capital of 18.56% and Tier II capital of 2.74% and Return on Equity (RoE) at 21.13%. Loan asset quality, measured as a per cent of loan assets, reached at gross and net level to 2.32% and 1.68% respectively.

SJVN Ltd

CMP (as on Apr 18, 2017)

35

Dividend/share

2.7

Dividend Yield (%)

4.9

SJVN Ltd, erstwhile Satluj Jal Vidyut Nigam, is a Mini Ratna category-I joint venture enterprise formed between Government of India (GoI) and Government of Himachal Pradesh (GoHP), primarily engaged in power generation and transmission activity. SJVN’s present installed capacity stands at 1959.6MW comprising of 1912MW of hydro and 47.6MW of wind power. SJVN is implementing 11 hydro projects totalling 3237MW comprising of 8 projects in India with 1167MW capacity and 3 projects of 2070MW in Nepal & Bhutan; apart from this, SJVN is implementing one 1320MW thermal project in Bihar. On transmission front, SJVN is a JV partner in Cross Border Transmission Company Ltd. (CBTC) Ltd. with Power Grid, IL&FS and Nepal Electricity Authority in execution of 86km long 400kV double circuit in Indo-Nepal cross border power transmission corridor between Dhalkebar (Nepal) and Muzzafarpur (India). SJVN is also implementing 400kV double circuit associated transmission line of 310km length for its 900 MW Arun-3 Project in Nepal. SJVN’s solar power projects under survey and investigation include 4,000 MW Ultra Mega Green Solar photovoltaic (PV) Power Project, 5MW solar PV grid connected power project, and Ultra Mega Hybrid Renewable Energy (Solar and Wind) Park.




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