3 Dividend Stocks for Regular Income Seekers

  • Stock Market Analysis

The words 'regular income' are associated with securities that provide a steady stream of income to holders at regular intervals. Interest on fixed deposits, debentures, and bonds is considered fixed income due to the nature of these financial instruments. Investors always look at fixed deposits, corporate FDs, debt mutual funds to satisfy their regular income needs. They hardly consider equities for such conditions. Old-age investors often seek a haven to park their hard-earned funds.

Although companies must disclose their dividend policy, they aren't under any compulsion to pay regular dividends. A dividend yield is a dividend per share divided by the stock's market price. Higher dividend yield may be due to increased dividend per share or low stock price. There are many companies in the market with high dividend yields. However, we need to be sure of the continuity of high dividend yields. It is essential to look at the business, stock price variation, and consistency of dividend announcement. We scanned for high dividend-paying stocks and came up with three shares where cash-flows would be more or less steady.

Indian Oil Corporation Ltd (NS: IOC )

Indian Oil Corporation is India's Maharatna national oil company owned by the Government of India. The company's business interests are spread across the entire hydrocarbon value chain. IOC's business operations range from refining, pipeline transportation & marketing to exploration & production of crude oil & gas, petrochemicals, gas marketing, alternative energy sources. The company has consistently paid dividends every year since 2001. In 2021, it declared an interim dividend of Rs 7.5 per share and Rs 3.0 per share on January 29 and March 10, respectively.

For FY2021 ending March 31, IOC has declared an equity dividend of 120%, amounting to Rs 12 per share. On July 19's closing price of Rs 105.95, the dividend yield comes to 11.3%. The company's dividend yield is above the industry average of 8.5%. The stock has gained 12.7% over the last 12 months. Typically companies declare higher dividends if future growth prospects are dim and vice versa. Investors should note that any decline in dividend per share may get compensated from share price appreciation.

Bharat Petroleum Corp. Ltd. (NS: BPCL )

Commonly known as BPCL, another Indian Government-owned oil and gas company operates two large refineries in Mumbai and Kochi. The company manufactures petroleum, petroleum products, lubricants, LPG and operates retail outlets throughout India. The Government of India has decided to sell its entire ~53% stake in BPCL. Ahead of its privatization, the company declared a record Rs 12,581 crore dividend this year, including a special dividend of Rs 7,592 crore in May. The final dividend of Rs 58 per share, including a one-time special dividend of Rs 35 per equity share for FY2021, is subject to shareholders' approval.

For FY2021, BPCL reported a super huge 700% rise in standalone net profit to Rs 19,041.7 crore compared to Rs 2,683.2 crore in FY2019-20. Stake sales in Assam's Numaligarh refinery, higher refining margins, and rebound in crude oil price drove BPCL's above normal net profit growth. On July 19's closing price of Rs 453.90, the dividend yield comes to 12.8%. Even if the stock value falls by the amount of dividend in the future, it is likely to deliver superior returns ahead, riding on better financials, better margins, and capacity utilization driving top-line growth.

Hindustan Petroleum Corporation Ltd (NS: HPCL )

Established in 1974, HPCL owns and operates refineries in Mumbai and Visakhapatnam. With over an 18% market share, the company is engaged in refining and marketing petroleum products in India. The company has consistently paid dividends since 2001. HPCL's earnings per share jumped 30.6% to Rs 70.57 in FY2021 from Rs 54.05 in FY2017. Revenue CAGR was 5.6% during the same period. What is noteworthy is the stake increase by promoters which went up 3.8% year-on-year to 54.9% in June 2021. On May 20, 2021, HPCL announced a dividend of Rs 22.75. Based on July 19's stock price of Rs 272.05, the dividend yield comes to 8.4%. Notably, the stock gained 17.7% in the last year. Investors may consider investing in these scrips as an alternative to fixed deposit investments.

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  • Ashok Sharma @Ashok Sharma
    Please also discuss about capital erosion if investing in such stocks ...ITC, Coal India.....it is plain cheating
    Like 9
    • Raj Joshi @Raj Joshi
      You are right ...
      Like 0
    • sheik basha @sheik basha
      The choice is yours, good company, good net profit, EPS growing YOY, BV < price, buy when market correction or crash and hold it.
      Like 1
    • Rabindra Kumar Mishra @Rabindra Kumar Mishra
      How can we miss the Coal India.
      Like 0
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  • Ajay Gala @Ajay Gala
    From my view SJVN is the best
    Like 2
    • Shiva Prasad @Shiva Prasad
      @Ajay Gala PNB Gilts too
      Like 1
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  • Himanshu Dave @Himanshu Dave
    for dividend purpose, PowerGrid and REC is the best
    Like 3
    • Raj Joshi @Raj Joshi
      They are safer then others
      Like 1
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  • Karthikeyan Rajagopalan @Karthikeyan Rajagopalan
    You have disregarded the tax on dividend
    Like 2
  • Alok Shukla @Alok Shukla
    I bet only BPCL
    Like 2
  • Rajiv Sheth @Rajiv Sheth
    all are psu
    Like 0
  • Rajesh kumar @Rajesh kumar
    oil stocks has no future 😕
    Like 4
    • Abdulla Ibrahim @Abdulla Ibrahim
      short term value
      Like 0
    • muthu selvam @muthu selvam
      you fool...only car and bike electric...but road,plastic,you daily used 70%product made in oil...todayfutcheroil is king in world is last human ...
      Like 0
    • Manish Saraf @Manish Saraf
      After ex date stocks fall like garbage . I bought hpcl for dividend and now having loss of 20000 after adjusting dividend . it is not worth buying
      Like 1
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