Dividend stocks are those that make quarterly or annual payouts to their shareholders, usually in the form of cash. A dividend is a percentage of a company's profit distributed to its shareholders.
Here's a list of top dividend-paying stocks in FY22
Dividend stocks are often well-established corporations with a history of paying earnings to shareholders. However, companies may choose to keep their accumulated profits and reinvest them in their business or reserve them for future use.
Some established companies have the practice of disbursing the majority of their annual profits annually among investors in order to establish goodwill in the market. And a company's dividend policy is often seen as a testament to its confidence in future earnings growth and sustainability of the business.
In dividend yield stocks, an investor enjoys the benefit of dividend income along with capital appreciation.
Purchasing dividend stocks can be a great option for individuals trying to create income or simply grow wealth by reinvesting dividend payments.
One of the simplest methods to determine the safety of a dividend, according to experts, is to look at its payout ratio or the percentage of net revenue that goes toward dividend payments.
The ratio provides a clearer picture of how much of the company's overall profit is returned to shareholders in the form of dividends and how much of the profit is reinvested in future investments, debt repayment, or cash reserves.
Here are the companies from the Nifty 500 list that have paid the highest dividends for the fiscal year 2022, based on the dividend declared so far in FY 2022.
|Company Name||Market Price (Rs)||EPS TTM (Rs)||P/E||Dividend Amount (Trailing one Year) (Rs)||Dividend Yield (%)|
|Sanofi India Ltd||6842||450.23||15.4||490||7.06|
|Hinduja Global Solutions||960||1,460.35||0.67||217||11.17|
|Oracle Financial Services||3,293.85||219||15.14||190||5.74|
|Bayer Cropscience Ltd||5,398||143.58||36.52||150||2.84|
|IIFL Wealth Management||1,566||63.13||23.95||75||4.82|
|Vardhman Textiles Ltd.||286.8||53.58||5.37||51.5||3.57|
|Note: Market prices (as on 31 May)|
Why one should invest in dividend-paying stocks?
Investing in dividend-paying stocks is a good alternative for people who want a consistent source of income and wish to avoid stock price volatility.
The following are some of the reasons listed by Nirmal Bang Securities as to why dividend-paying companies should be chosen by investors.
Great source of passive income
Dividend stocks offer guaranteed returns to ensure that money is invested in the right place.
This gives investors a regular source of income, which is similar to the interest if the money is kept for a long time.
High-dividend stocks don’t lose their value even if there is a sudden market crash or decline in a particular event. As a result, they are safe compared to other growth stocks.
The best thing about dividend stocks is that they gain back their value during harsh market movements, making them a reliable option for risk investors looking for capital protection.
These stocks, when added to the portfolio, help to diversify the risk potential effectively.
When an investor receives dividend payouts, they have the opportunity to use them for personal expenses or reinvest in the same stock.
Using dividend payouts to reinvest in the same stocks can help investors deliver consistent returns on their investments thanks to dividend compounding.
When investors continuously reinvest their dividend payouts in the stock market, it helps them boost returns effectively.
Although dividend stocks do not have any higher growth potential than growth stocks, they do have the potential for value appreciation.
Investing in dividend stocks helps investors enjoy all the dual benefits, such as value appreciation and consistent regular income.
Investors do not have to spend their entire time and energy tracking the stock movements or other movements happening in the stock market with dividend stocks.
Dividend stocks generally possess less risk than non-dividend stocks. Still, before looking to add up an investment portfolio strategy, an investor should familiarize themselves with both advantages and disadvantages of dividend investing.
However, before selecting dividend-paying stocks, it is important to review their financial records, dividend payment history, and market goodwill.
Note: This story is for informational purposes only. Please seek the advice of a financial advisor.