Benchmark indices have been volatile since the beginning of the year amid uncertainty due to the Lok Sabha elections, US-China trade war worries, oil price fluctuations, and liquidity woes in non-banking financial companies (NBFCs).
In the last one month, the indices have hit all-time high levels as well as fallen to multiple lows. To counter loss in investment given the recent heightened market volatility, analysts have suggested adding quality dividend yield stocks to portfolios.
According to analysts, dividend stocks are likely to absorb the volatility and remain relatively safe in such a scenario. Dividends are part of profits that are given to shareholders of the company as a reward for being part of their business. Dividend income of up to Rs 10 lakh is exempt from tax.
Dividend-paying stocks have two basic components — dividend payout ratio and dividend yield.
Dividend payout ratio represents the amount of money from a company's net earnings paid out as dividend, while yield is the return on investment in the stock.
IDBI Capital in a report released Monday named top quality dividend stocks. The list included Ircon International, Hindustan Zinc, Coal India Care Ratings, REC, Balmer Lawrie & company, Hindustan Aeronautics, Bajaj Consumer Care, among others.
Top 15 quality dividend stocks
For the year ending March 2019, Ircon International has declared an equity dividend of 215.45 percent amounting to Rs 21.545 per share. At its current share price of Rs 409, the dividend yield comes at 5.32 percent. The company's latest payout stands at 86.6 percent and yield at 9.3 percent.
The company has a good dividend track report and has consistently declared dividends over the last five years.
For the year ending March 2019, Hindustan Zinc has declared an equity dividend of 1000 percent amounting to Rs 20 per share. At its current share price of Rs 245, the dividend yield comes at 8.23 percent. The company's latest payout stands at 106.2 percent and yield at 8.2 percent.
Coal India gave two interim dividends in FY19. The company gave Rs 7.25 per share in December 2018 and then in March 2019 it gave Rs 5.85 per share.
Care Ratings declared five dividends in the FY19 amounting to Rs 55 per share (5.8 percent of stock value).
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