Stock Under Rs 40: Gives 5% Dividend, FY22 Profit Jumped to ‘Record-High’!

In a time, when there are a lot of uncertainties looming around, having stocks that pay a regular dividend to offset some of the notional losses is always a good idea. There are many dividend stocks that qualify to be in any high-quality dividend portfolio and one such company is Rail Vikas Nigam Limited (NS: RAIV ). There are so many good things about this PSU that it’s almost a no-brainer for dividend seekers.

First of all, it has been given the status of Category-1 MiniRatna CPSE and its administration is under the Ministry of Railways, Government of India. The company has a market capitalization of INR 7,526 crores and it is a specialized finance company created to undertake project development, mobilization of financial resources and implementation of projects pertaining to rail infrastructure. It also acquires, purchases, licenses, concessions or assigns Rail infrastructure assets including contractual rights and obligations with the approval of MoR whenever required.

Coming to the financial performance of the company, one would be surprised to see such consistent growth in revenue for a small-cap business. The company has been increasing its revenue at a yearly rate of 26.68% over the last 5 years, while net income has risen at a 5-year CAGR of 21.67%. In FY22, the company clocked a record revenue of INR 20,285.46 crores, which is almost 170% more than its market capitalization, while net income also jumped to the highest ever, at INR 1,182.69 crores, compared to INR 991.57 crores in FY21. The fun fact is, since FY14, there hasn’t been a single year when the company’s net income declined on a YoY basis.

As it is a government entity, the majority of the stake is with the government, but FIIs and DIIs also hold 1.76% and 7.31% respective stakes in the company.

The main attraction of RVNL is its regular dividend-paying policy. The company got listed on the NSE in 2019 and since then it has been paying dividends every year, all thanks to its consistent profitability. In FY22, the company paid a dividend of INR 1.83 per share, while the dividend on a TTM basis is INR 2.02 which translates to a dividend yield of 5.4%. More importantly, the company has been maintaining its dividend payout ratio of over 0.3 for the last three consecutive years, which is quite decent. This means, that over 30% of the net income is being distributed amongst shareholders in the form of dividends.