Are high dividend stocks worth chasing? Check this analyst report here – Top 4 suggestions

One of the important parameters to choose a value investing in the share market is by reaping dividend yield from a specific stock. The dividend yield is a financial metric that assesses dividend payout and allows a comparison with payout on other stocks.  

A report by William O’Neil India pointed out these top four stocks - Power Finance, Vedanta Ltd, Coal India, Indian Oil - that have been spectacularly high in terms of dividend yield in the financial year 2020-21 (FY21). It quoted investment guru Benjamin Graham, who had popularised dividend yield as a stock-picking strategy.  

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Generally, dividends are profits shared by the company with its shareholders, as few companies share some profits as dividends, the report said, adding further that dividend yield stocks have taken a risk of 17 per cent to give annualized returns of 11 per cent during the past decade. 

Below are the top four paying dividend stocks in FY21 

Power Finance 

Power Finance is one of India’s leading non-banking financial corporations, which operates in power sector financing and the integrated development of the power with near 20 per cent market share. 

The total income stood at Rs 37,767 crore in FY21 as against Rs 33,371.06 crore in FY20. During FY21, the company registered a PAT (profit after tax) of Rs 8,444 crore in FY21. The company’s total dividend payout for FY21 stood at Rs 2,640 crore (including TDS), representing 31.27 per cent of PAT. 

Vedanta Ltd 

Vedanta Limited is one of the world's leading diversified natural resource companies. It is the Indian subsidiary of Vedanta Resources Limited. It operates in India, South Africa, Namibia, and Australia. 

The company reported a 79 per cent year-on-year increase in revenue to Rs 28,105 crore in Q1 FY22. While it registered the highest ever quarterly EBITDA of Rs 10,032 crore, up 150 per cent YoY and EBITDA margin stood robust at 41 per cent. 

The company earlier in September has approved an interim dividend of Rs 18.50 per share for FY22 that will amount to Rs 6,877 crore. 

Coal India 

Coal India Ltd, a Public Sector Undertaking under the Government of India’s Ministry of Coal, has seven producing subsidiaries. The company is the single largest coal producer in the world and also operates through its subsidiaries in 84 mining areas spread over eight states of India.  

The company reported net sales for the year stood at Rs 82,710.32 crore, thereby registering a decline of 7.46 per cent on a YoY basis, and posted a PAT of Rs 7,640.1 crore against Rs 11,280 crore for the same period last year. 

During FY21, the company paid an interim dividend of Rs 12.50 per equity share of the face value of Rs 10/- each amounting to Rs 7,703.43 crore. 

Indian Oil 

Indian Oil is a diversified, integrated energy major with presence in almost all the streams of oil, gas, petrochemicals, and alternative energy sources. It uses cutting-edge R&D and state of the art technologies to deliver quality products and services. 

The company has proposed investment of Rs 35,000 crore over the next 5 years in petrochemicals division and Rs 13,000 crore in the next 3–5 years in Natural Gas. It has also declared a total dividend of Rs 11,017 crore, including an interim dividend of Rs 9,640 crore.