Reap rich dividends from 5 stocks

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Pee Vee
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Reap rich dividends from 5 stocks

Post by Pee Vee » Mon Sep 03, 2018 11:20 am

Business Line has a nice report on five high dividend stocks which make for good investment now.

look at stocks that have been delivering a steady stream of dividends, irrespective of market cycles. Here are our top picks

MOIL: Shining bright

At the current market price of ₹184, the stock is reasonably valued at about 11 times its trailing 12-month earnings, lower than the 19 times it had traded at, on an average, over the past three years. Long-term investors with a medium-risk appetite can buy this stock.

Since MOIL is a PSU, investors can expect a steady dividend payouts in the future too.

Hero MotoCorp: Revving up

The company is expected to put up a better show this year. Increasing affordability in the urban areas has seen the sale of premium bikes heat up in recent times. While Hero has not traditionally been strong in this segment, it has recently introduced the Xtreme 200R to cash in on the demand for premium bikes. The Xpulse 200 cc will also be launched this fiscal. It has also upgraded the Karizma, which is offered in the 200-250 cc segment.

Mahanagar Gas: Well-fuelled

At ₹19 per share (FY18 dividend) and the current stock price of ₹865, the dividend yield works out to 2.2 per cent. Then, there is also the potential of good appreciation in the stock price.

Since early November 2017, the stock has lost about 32 per cent. It now trades at an attractive 18 times the trailing 12-month earnings compared with the average of 22 times over the past three years.

PSU Oil Marketing Companies: Down but not out

Being a shareholder in companies controlled by the government comes with its plusses and minuses. On the positive side, a steady stream of healthy dividends is almost a given. The major shareholder — the government — is always in need of funds, and PSU companies have little choice but to ‘do the needful’. On the other hand, there is the real risk of government interference in the operations of these companies. Decisions are sometimes taken, not out of commercial considerations, but to make the government look nice in the public eyes. That takes a toll on the stocks. The upshot: the combination of high dividends and decline in stock prices translate into high dividend yields.

valuations have moderated considerably. On a trailing 12-month basis, Indian Oil now trades at about six times (three-year average is about 10 times), HPCL trades at about 5.5 times (three-year average is about 8.5 times) and BPCL trades at about 7.5 times (three-year average is about 12 times). Finally, it is unlikely that the government will roll back completely the pricing reforms that have ushered in huge positive change over the past few years. It is likely that, in less than a year from now, when the election dust settles, true pricing freedom will be restored to the OMCs.


Oracle Finacial Services Software: High-margin player

A high-margin, stable products business, a healthy geographic-mix of emerging and developed markets, and entrenched presence with global financial services clientele, are positives.

The company consistently offers healthy dividends and rewards shareholders. On an average, the dividend yield has been well over 3 per cent over the past several years.

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