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After the Covid-19 pandemic, inflation has become one of the biggest worries across the world. While central banks had flooded the financial markets with a gigantic amount of liquidity leading to inflation, the ongoing Ukraine-Russia war has only acted as a double whammy on already soaring inflation.
While the US and UK are currently reeling under the 40-year high inflation, India is doing relatively better. The recent CPI data for May 2022 showed inflation of 7.04%, cooling off a bit from an 8-year high.
Investors have been taking a hit from a consistent sell-off in the equities market, and high inflation is making it even more difficult for them to make a decent inflation-adjusted return. However, there are some companies that might help investors beat inflation with their high dividends alone and give them some cushion to make up for some of their notional losses. If you are looking for inflation-beating dividend-paying stocks on the NSE, then here’s a list of a few.
Coal India Limited
Coal India Ltd (NS:COAL) is a Maharatna company and is a Government of India undertaking and is primarily engaged in the production and sale of coal. The company has a market capitalization of INR 1,17,738 crores. In FY22, Coal India reported a consolidated profit of INR 17,358.1 crores, a 36.6% jump from FY21 earnings of INR 12,699.89 crores.
Coal India shares are trading at a lucrative dividend yield of 8.9%, compared to the sector’s average of 2.58%. Mutual funds have also increased their exposure in Coal India, as represented by the latest filings which showed their stake inching up to 9.6% as of March 2022, from 9.17% at the end of December 2021.
Indian Oil Corporation Limited
Indian Oil Corporation Ltd (NS:IOC) is a government-owned oil and gas exploration company, headquartered in New Delhi. The company has a market capitalization of INR 1,06,944 crores and clocked a 16.01% growth in consolidated net income to INR 25,102.23 crores in FY22 as compared to INR 21,638.21 in the last year.
IOC shares are trading at a mouth-watering dividend yield of 10.82%, which is significantly higher than the sector’s average of 1.64%. More interestingly, the price-to-book value ratio (P/B ratio) of the company also stands at 0.95 which indicates that the current market price of its shares is even lower than the book value per share of the company.
Housing and Urban Development Corporation Limited (HUDCO)
The last stock on our list that beats inflation with dividends alone is Housing and Urban Development Corporation Ltd (NS:HUDC), which is also a Government of India undertaking and comes under the ownership of the Ministry of Housing and Urban Affairs. The company has a market capitalization of INR 6,926 crores and it clocked consolidated net earnings of INR 1,716.41 crores in FY22, compared to INR 1,578.5 crores in FY21.
HUDCO shares are quoting at a dividend yield of 7.95%, compared to the sector’s average of 1.01%. The company’s dividend payout ratio has also improved over time, from 0.14 in FY19 to 0.32 in FY22. The dividend payout ratio simply depicts how much dividend the company distributes among its shareholders from its net earnings.