Best Dividend Stocks in India

Last updated on August 9, 2024

What is Dividend Stock?

Best Dividend stocks in India are shares of companies that regularly distribute a portion of their earnings to their shareholders in the form of a dividend. These payments can be made quarterly or annually by companies across various sectors as a way to share profits with their investors.

Benefits of Dividend Investing

Dividend investing has certain characteristics in terms of the stocks and businesses behind them as well as the investors preferring this investment style. Typically, companies pay dividends when they are short of investing opportunities which can generate higher rates of return. This largely includes companies in mature industries where the business is saturated.

However, exceptions exist and in India, PSUs are a fine example of this. PSUs are good dividend payers simply because the government – generally the largest shareholder in PSUs – gets revenues this way.

Similarly, dividend investing is usually preferred by individuals who are looking for regular cash flows. These include retired individuals where the safety of capital and regular cashflows are the most important factors.

Although dividends can be reinvested to buy more shares, doing this runs contrary to the original requirement of receiving regular cashflows. Since dividends are now taxed in India, it further complicates the situation. These are the best dividend stocks with high dividend yield and reasonable valuations.

Read Also: All-time Largest IPOs in India at a Glance

List of Best Dividend Stocks in India

#1 Indian Oil Corporation – Top Dividend Stock

Indian Oil Corporation – among the largest companies operating in the petroleum industry – is controlled by the Government of India. It is the largest refiner in the country operating 11 refineries with 80.6 MMTPA refining capacity and holds a 32% share in domestic refining capacity. The company is the second largest petrochemical player with a capacity of 4.1 MMTPA.

Indian Oil has a strong focus on innovation through R&D, it has filed 1,646 patents and doubled granted patents in the last 5 years. The company has also delivered impressive profit growth of 19.5% CAGR over 5 years while maintaining healthy dividend yield and dividend payout.

Revenue – INR 776,352 crore
Net Income – INR 43,161 crore
3-Year sales growth – 28.7%
ROCE – 21.1%
PE Ratio – 8.7
Dividend Yield – 6.66%

#2 Hindustan Petroleum Corporation

Hindustan Petroleum Corporation is operating in the business of refining crude oil and marketing of petroleum products and is a subsidiary of Oil and Natural Gas Corporation (ONGC) which is owned by the Government of India. The company owns and operates the largest lube refinery in India with a refining capacity of 35.5 MMTPA. The company holds a 20.29% domestic market share in petroleum products in India.

Hindustan Petroleum has the second largest retail network in India with 22,022 retail outlets, it also has the second largest petroleum product pipeline in India with a total pipeline network of 5,134 KM. The company has a joint venture with the Rajasthan Government for a refinery in Barmer, Rajasthan with a total capacity of 9 MMTPA and it is also enhancing its presence in LNG, with 5MMTPA LNG terminal at Chhara, Gujrat.

Revenue – INR 433,857 crore
Net income – INR 16,015 crore
3-Year sales growth – 23%
ROCE – 21.3%
PE Ratio – 8.43
Dividend Yield – 6.70%

#3 Bharat Petroleum Corporation – Another Oil PSU Among Top Dividend Stocks

Bharat Petroleum is a Government-owned company that operates in the refining of crude oil and marketing of petroleum products. The company operates 3 refineries with a total refining capacity of 35.3 MMTPA.

Bharat Petroleum has operational excellence with Gross refining margins (GRM) of 14.14 $/bbl highest in the industry. The company is planning to expand its capacity to 45 MMTPA through expansion of Mumbai and Kochi refineries, its expansion of Bina refinery by 3.2 MMTPA is underway. BPCL is in a joint venture with Petronet LNG to operate LNG terminals at Kochi and Dahej.

Bharat Petroleum has 2,034 CNG outlets in India and is also enhancing its petrochemical capacity up to 2.9 MMTPA by 2029. It has been awarded as Innovator of the Year for “BharatH2Sep Technology”.

Revenue – INR 448,083 crore
Net income – INR 26,859 crore
3-Year sales growth – 24.9%
ROCE – 32.1%
ROCE – 32.1%
PE ratio – 7.78
Dividend Yield – 5.99%

#4 Chennai Petroleum Corporation

Chennai Petroleum is in the business of refining crude oil to produce and supply various petroleum products, specifically lubricating oil additives. It is a government-owned company headquartered in Chennai.

The company has a refining capacity of 11 MMTPA. It is entering in Joint venture with Indian Oil for 9 MMTPA refinery. Chennai Petroleum has a strategic partnership with Indian Oil for marketing of LPG, Motor spirit ATF, and diesel. The company also produces nationally important products such as Navy-grade NATO diesel, Missile fuel Vajravega, and Rocket Propellant.

Revenue-INR 66,024 crore
Net income-INR 2,711 crore
3-Year sales growth-43.8%
ROCE -35.4%
PE Ratio– 6.10
Dividend Yield-5.38%

#5 Coal India – Dividend Investing Imperative

Coal India is a Maharatna company owned by the Government of India. Coal India mainly operates in mining and production of coal and is the country’s largest coal producer. Major consumers of the company’s products are the power, steel sector, cement, and fertilizer sector.

Coal India had highest highest-ever production of 703 MT in FY 23 from 322 working mines. The company is adopting modern techniques like blast-free selective mining for better quality and consistent-size coal. Coal India is diversifying in clean energy through its subsidiary CIL Solar PV Limited.

Revenue-INR 142,324 crore
Net income-INR 37,369 crore
3-Year sales growth -16.5%
ROCE– 65.1%
PE Ratio – 9.03
Dividend Yield-4.95%