Ten best dividend-paying stocks right now

One of the unique advantages of investment in equities is the recurring dividend income that companies pay to their shareholders. Most companies declare an equity dividend at the end of the financial year when they announce their annual results. Though some companies such as Tata Consultancy Services declare equity dividends at the end of every quarter, they are in the minority. 

Right now, we are in the middle of the earnings announcement season and companies are busy announcing their financial results for the financial year FY 2023-24. Based on the company’s prevailing share price and its financial performance in the previous financial year, the dividend income could be high and, in many cases, match the annual interest income from fixed-income assets such as bank FDs and bonds. 

Besides, dividend income is most often tax-free in the hands of retail investors, unlike interest on bank FDs. Additionally, the dividend is over and above the capital returns that investors earn from equities.

So, if you are planning to invest in stocks for dividend income, then this is the right time to do so as companies are busy declaring dividend payout for FY24. Here are the 10 best dividend-paying stocks based on their current dividend yield and their financial performance in the last financial year:

 1. The public sector miner Coal India is at the top of our list with a dividend yield of 5.5 percent and a return on equity of 40.6 percent - one of the best in the mining space. The company has been one of the top dividend payers in the country and has declared a total dividend of Rs 25.5 per share for FY24. 

If you stay invested in Coal India, expect a steady dividend income year after year from the company.

2. The mutual fund manager UTI Asset Management Company is next on our list a dividend yield of 5.2 percent at its current stock price and a return on equity of 17.4 percent. The company's net profit was up 75 percent in FY24 and it declared an equity dividend of Rs 47 per share for FY24. In comparison, it had paid Rs 22 per share in FY23. Long-term investors can expect a steady dividend from the company in future as well.

Also Read: Five ways to generate regular income after retirement

4. The tobacco and FMCG major ITC is next on our list of dividend stocks with a dividend yield of 3.6 percent and a return on equity of 29.6 percent currently.  The company is yet to declare its results and final dividend for FY24 but investors can expect a large payout.

Two years ago, ITC announced a new dividend payout policy and intends to share a large portion of its net profit with shareholders. In FY23, the company paid Rs 15.5 per share an equity dividend up from Rs 11.5 a year ago.

The company's net profit was 9.4 percent in the first nine months of FY24.

5. The IT services major Oracle Financial Services Software is the next company on our list with a dividend yield of 3.1 percent and a return on equity of 28.2 percent. The company's net profit was up 22.9 percent in the last 12 months and it paid a dividend of Rs 240 per share in FY24.

Also Read: Seven retirement planning tips for women

6. The public sector project financier REC Ltd is next on our list with a dividend yield of 3 percent and a return on equity of 22.2 percent currently. The company's net profit was up 26.7 percent in the last 12 months and it paid a dividend of Rs 16 per share for FY24 up from a payout of Rs 8.25 per share a year ago.

7. The private sector port operator Gujarat Pipavav Port is next with a dividend yield of 3 percent and RoE of 16.4 percent currently. The company’s net profit was up 21.8 percent in the last 12 months and is expected to raise its dividend payout for FY24. The company is yet to declare its financial results for FY24.

Also Read: Five stock market tips for beginners

8. The asset manager Nippon Life India Asset Management is next on our list with a dividend yield of 3 percent and RoE of 27.8 percent currently. The company's net profit was up 53.1 percent in FY24 and it paid an equity dividend of Rs 16.5 per share for FY24 up from Rs 11.5 a year ago.

9. The pharma major Glenmark Life Sciences is the next company on our list with a dividend yield of 2.8 percent and a return on equity of 20.2 percent currently. The company's net profit was up flat in FY24 but it paid a dividend of Rs 22.5 per share in FY24 up from Rs 21 per share a year ago.

10. The public sector Canara Bank is next on our list with a dividend yield of 2.7 percent at its current stock price and a return on equity of 16.6 percent currently. The company's net profit was up 35.8 percent in FY24 and it declared an equity dividend of Rs 16.1 per share for FY24 up from Rs 12 per share a year ago.

Happy Investing!

(Disclaimer: This article is for information purposes only. Readers are advised to consult a certified financial advisor before making an investment in any of the funds or securities mentioned above.)

(Karan Deo Sharma is a Mumbai-based finance and equity markets specialist). 

Also Read: Five mid and small-cap stocks trading at a deep discount right now

Look up our YouTube Channel