Smallcap stock hits 10% lower circuit after inclusion in Additional Surveillance Measures (ASM)
Small-cap companies are generally not known for high dividends as the management focuses more on the growth prospects of the businesses for which they require their profits to be reinvested, hence leaving a little part (if any) of the profits for the shareholders. However, this is not a steadfast rule and if looked closely, there are a few small companies that are quoting at a high dividend yield.
Listed below are 3 companies with a market capitalization of less than INR 15,000 crores and are trading at a dividend yield of over 9%. To keep quality in check, all these companies are selected from the Nifty 500 index.
Housing and Urban Development Corporation Limited
Housing and Urban Development Corporation Ltd (NS:HUDC) or HUDCO is a government-owned financing entity that provides long-term finance for the construction of houses for residential purposes. In FY22, the company recorded a net revenue of INR 6,997.66 crores which is a slight hit of 3.8% over the FY21 figure of INR 7,277.73.
The stock is trading at a P/E ratio of 4.19 while the dividend yield of a lucrative 9.74% makes it a good choice for both dividend seekers and value investors. Not to forget, the company is also available at a book value of less than 1 per share.
Vardhman Textiles Limited
Vardhman Textiles Ltd (NS:VART) is an integrated textile manufacturer engaged in the manufacturing of cotton yarn, synthetic yarn, woven fabric, sewing thread, acrylic fiber, tow and garments and has a market capitalization of INR 9,968 crores. FY22 has been the best year for the company so far, as it posted a net income of INR 1,546.89 crores, which is not just the highest ever but also 273.3% up than FY21 profit of INR 414.35 crores.
The stock is trading at a P/E ratio of a mere 6.44, all thanks to a massive profit jump in the previous financial year. Interestingly, the stock is also quoting at a mouth-watering dividend yield of 9.69% as the company declared a dividend of INR 34 per share in FY22. However, investors need to note that the FY22 dividend was quite high which the company generally does not pay.
National Aluminium Co Limited
The last dividend-paying stock on the list is aluminum producer, National Aluminum Co. Ltd. (NS:NALU), having a market capitalization of INR 12,782 crores. FY22 was a record year for this metal producer, with the highest-ever profit of INR 2,951.41 crores. The 5-year CAGR of profit growth is around 34.61% which is quite good.
The stock is trading at a P/E ratio of 4.33, compared to the sector’s average of 13.26, while the price-to-book ratio is a mere 1.02. The dividend yield is a good 9.34% on account of INR 6.5 per share of dividend in FY22.