A Look at the ‘Only’ Nifty Stock That Pays Over 10% Dividend!

  • Stock Market Analysis

In the current high-volatile regime, having a high-paying high-quality dividend stock seems a good option for any portfolio. Dividends not just improve the overall profitability of the investment in the form of a regular cash flow but also provide a cushion for the notional losses when the market dives lower.

Power Grid Corporation of India Ltd (NS: PGRD ) is one stock that is making headlines on the street for being the only Nifty company currently paying a mouth-watering dividend of around 12%. Headquartered in Gurugram, It is a Maharatna company and comes under the jurisdiction of the Ministry of Power.

The market capitalization of the company stands at INR 1,44,043 crores, making it the 33rd largest company on the Indian bourses. It is engaged in the power transmission business and helps in the planning, implementation, operation and maintenance of the Inter-State Transmission System. Its creditworthiness has also been rated as AAA/Stable by both CRISIL Ltd. (NS: CRSL ) and ICRA (NS: ICRA ), which is the highest safety standard.

The power demand has been phenomenal this year, surging by a record 40K - 45K MW per day especially due to severely high temperatures in the northern part of the country. On 9 June 2022, the electricity consumption was recorded at the highest per day ever, at over 2,10,792 MW with the consumption of 4.71 billion units of electricity. The company has spread a total of 1,72,557 Km of transmission lines with 265 sub-stations and a transformation capacity of over 4,80,457 MW, as of 31 May 2022.

With power generation facilities operating at full throttle, the business for Power Grid has also taken off. In FY22, the consolidated net earnings of the company shot up by 39.78% to INR 16,824.07 crores, as compared to INR 12,036.46 crores in FY21. As the EPS grew from INR 17.26 in FY21 to INR 24.12 in FY22, the dividend announced by the company increased over 3 times to INR 24.75 per share in FY22, compared to INR 7.31 per share in FY21. 

More interestingly, the dividend payout ratio has also jumped from 0.42 to 1.03 in the same time period. A payout ratio above 1 is very rarely seen. As per the current market price of INR 209, Power Grid shares are trading at a dividend yield of 11.99% with currently no upcoming dividend as of now. 

Valuations-wise, the company is looking quite decently priced, as the share price of Power Grid is quoting at a P/E of 8.56, compared to the industry’s average of 23.04. Peers such as Tata Power (NS: TTPW ) and Torrent Power Ltd (NS: TOPO ) are trading at a P/E of 37.98 and 48.53, respectively. In the last one year, Power Grid shares have delivered a return of 19.55%, compared to the Nifty’s fall of 0.52%, delivering a clear outperformance.

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  • IRFAN SHAH @IRFAN SHAH
    buy tata power
    Like 0
  • Angshuman Moitra @Angshuman Moitra
    When was the last declared dividend credited?
    Like 1
  • Angshuman Moitra @Angshuman Moitra
    When was the last declared dividend credited?
    Like 0
  • Nitin Shelke @Nitin Shelke
    Why current dividend yield is showing 4.63% ?
    Like 2

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