Top 10 large-cap companies ideal for dividend investment strategy
It offers a reliable source of income without the need for constant monitoring.
The goal of dividend investing is twofold. Firstly, it aims to provide investors with a steady stream of income from the companies they invest in. This income can be used for various purposes, such as supplementing existing income, reinvesting to further grow their investment, or covering expenses. Secondly, dividend investing also offers the potential for long-term growth. While companies paying dividends provide regular income, their stock value can also appreciate over time, allowing investors to profit when they sell their shares in the future.
But is this strategy for me? This strategy is suitable for different types of investors. Some investors, known as income seekers, prioritize stocks with high dividend yields to maximize their income stream. On the other hand, some investors seek a balance between dividends and the potential for capital appreciation, aiming for both income and growth from their investments.
How to select the stocks:
When selecting dividend stocks, it's essential to consider various factors. Firstly, examine the company's dividend history. Look for firms with a consistent track record of paying dividends over time, preferably with a trend of increasing payouts. Additionally, assess the company's financial health to ensure its ability to sustainably pay dividends in the future. While dividend yield is important, it shouldn't be the sole metric for decision-making. Strike a balance between dividend income and the company's growth potential.
Dividend investing attracts investors for several reasons. It offers a reliable source of income without the need for constant monitoring. Moreover, dividends can provide a hedge against inflation by potentially increasing over time. This approach also promotes a long-term perspective, helping investors navigate market fluctuations with patience and resilience.
Limitations:
However, dividend investing has its drawbacks. While dividends provide steady income, dividend-paying stocks may not yield as high returns as other investments, potentially limiting overall portfolio growth. Additionally, focusing on dividends might lead investors to overlook high-growth opportunities. Lastly, dividend income is often taxed at a higher rate than capital gains, impacting overall investment returns.
Here are the top 10 companies ranked by market capitalization with a good dividend yield:
|
S.NO.
|
Company Name
|
CMP
|
Market Cap. (Rs. Cr.)
|
P/E
|
Dividend Yield (%)
|
Sales Var 3 years (%)
|
Sales Var 5 years (%)
|
Profit Var 3 years (%)
|
Profit Var 5 years (%)
|
ROE 3 years (%)
|
Payout Ratio (%)
|
|
1
|
Infosys Ltd
|
1424.85
|
591519.46
|
22.73
|
2.67
|
15.22
|
13.2
|
10.48
|
11.24
|
30.9
|
72.63
|
|
2
|
HCL Technologies Ltd
|
1319.95
|
358285.74
|
22.82
|
3.94
|
13.4
|
12.71
|
12.62
|
9.46
|
22.86
|
89.91
|
|
3
|
NTPC Ltd
|
356
|
345201.31
|
17.7
|
2.04
|
17.2
|
14.88
|
18.66
|
9.29
|
12.38
|
41.57
|
|
4
|
Oil & Natural Gas Corpn Ltd
|
273.05
|
343568.88
|
7.49
|
4.12
|
16.81
|
14.4
|
36.57
|
11.67
|
13.94
|
39.93
|
|
5
|
Power Grid Corporation of India Ltd
|
309.5
|
287947.62
|
18.3
|
3.58
|
6.49
|
8.76
|
16.76
|
25.88
|
19.33
|
66.74
|
|
6
|
Coal India Ltd
|
448.6
|
276459.99
|
7.4
|
5.4
|
16.49
|
7.4
|
43.29
|
16.43
|
51.77
|
42.02
|
|
7
|
Indian Oil Corporation Ltd
|
159.4
|
225163.7
|
5.39
|
3.14
|
28.73
|
8.01
|
24.48
|
19.29
|
18.2
|
40.61
|
|
8
|
Power Finance Corporation Ltd
|
421.55
|
138998.98
|
7.39
|
2.61
|
7.64
|
9.79
|
30.67
|
18.9
|
20.91
|
22.02
|
|
9
|
REC Ltd
|
521.75
|
137454.79
|
9.71
|
2.41
|
10.14
|
13.33
|
19.06
|
19.76
|
21.28
|
29.78
|
|
10
|
Bank of Baroda Ltd
|
260.85
|
134921.03
|
7.19
|
2.11
|
16.79
|
17.48
|
144.21
|
76.83
|
14.28
|
20.97
|
DSIJ's 'Large Rhino' service recommends blue chip stocks of Large Cap companies that have leadership positions in their category. If this interests you, do download the service details here.
Conclusion:
Overall, dividend investing can be a good way to make money regularly and think about your investments over a long time. But it's important to choose the right companies and balance getting money with making your investments grow.
Disclaimer: The article is for informational purposes only and not investment advice.