These 2 Metal Stocks Pay Over 10% Dividend; Should You Buy?

Investors in metal shares have had a rough ride for the past few days. While the broader market index Nifty 50 has remained volatile, moving in a broad range of 16,400 and 15,700, some pockets have witnessed a one-sided fall.

Shares of mining companies, especially steel manufacturers have been hammered in the past few days, owing to the government’s decision to hike export duty on steel and related products. In the last three trading sessions, Nifty Metal has fallen approximately 11%, including today’s 1.95% fall to the last closing price of 5,079.25. 

Apart from Hind Zinc , all the constituents of Nifty Metal have closed the session in the red zone. Some shares also marked a new 52-week low which included - Tata Steel (NS: TISC ), JSW Steel (NS: JSTL ), Steel Authority of India (NS: SAIL ) and NMDC (NS: NMDC ). The intense selling pressure on the metal pack has been concerning investors as not everyone is able to withstand higher double-digit drawdowns.

However, the sharp fall in the metal space has also presented investors with an opportunity to look at dividend-paying companies at these attractive prices. Dividend yield gets influenced by two factors, first is the dividend itself and the second is the price of the share. A change in either one of them will influence the dividend yield of the stock.

The recent mayhem in metal shares has hammered them to a level, wherein dividend yield has become mouth-watering. Looking for such stocks? Read below.

Vedanta Limited

The chart of Vedanta Ltd (NS: VDAN ) might scare away a few investors as the stock is already down around 30% from its 52-week high of INR 440.75 which also qualifies the trend to be bearish. Also, according to the recent price action, the stock is forming a Bearish Pennant pattern which is a continuation pattern of an ongoing decline. The stock hasn’t yet breached the lower trendline of the pattern, meaning further downtrend hasn’t resumed yet, however a possibility of the same does exist.   

Image Description: Daily chart of Vedanta shares, showing a bearish Pennant pattern

Image Source: Investing.com

Now the good part, the 30% fall from the top has bumped up the dividend yield of Vedanta shares to 14.7%. In the Calander year 2022, the company has already announced a dividend of INR 44.5 per share and hasn’t skipped paying dividends in the last 10 years.

Steel Authority of India (SAIL)

Another stock that has faced the heat of a correction in metal prices and the government’s decision to curb steel export is SAIL. From the 52-week high of INR 145.9, the stock has nosedived to the last closing price of INR 71.15, losing a massive 51% from the high. Although the stock is in a free-fall mode, there is minor support around INR 67 which might halt the downtrend for a brief period of time.

Image Description: Daily chart of SAIL shares with a support level 

Image Source: Investing.com

Talking about the dividend, halving from the highs has surged the dividend yield to 11.18% and announced a dividend of INR 2.5 per share in March 2022, the first payout this year. The company had announced a total dividend of INR 6.8 per share in CY21.