This Stock is Giving a 5.5% Dividend Next Week!

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If you are a dividend lover and are always on the hunt to add high dividend yield stocks to your portfolio, then you must have a look at Vedanta (NS: VDAN ). It is a diversified natural resources company with a market capitalization of INR 1,153,52 crores and is currently trading at a P/E ratio of 6.13 compared to the industry’s average of 13.56.

The best part about this company is its dividend-focused management. The company is probably the only large cap that has become almost like an ATM machine for investors. It owns a decent stake in Hindustan Zinc (NS: HZNC ) which is also a regular dividend-paying company and therefore it is able to distribute that dividend among shareholders as well.

Recently, Hindustan Zinc announced a dividend of INR 15.5 per share, the ex-date of which was 23 November 2022. With that cash coming to Vedanta, the management of Vedanta decided to declare a dividend of INR 17.5 per share, the ex-date of which is 29 November 2022. So if you want to receive this amount which accounts for roughly 5.5% of the current share price of INR 316.55, then here’s your chance. Now some of you might think, that there is no use of it as the amount of dividend gets deducted from the share price, leaving no real gain on the table. For those of you folks, here’s a little on the recent dividend history of the company. 

This is the 4th dividend payout this year by the company, totaling a hefty amount of a massive INR 81.5 per share! That’s a gigantic dividend of 25.7% in 11 months (taking the current price into consideration). The average price of the last 11 months is roughly INR 308, meaning, the yield even goes higher with that lower price. At the current rate, Vedant’s annual dividend yield stands at a whopping 30.1%! This is hard to believe, especially from a large-cap firm. 

The payout ratio of the company on a TTM basis stands at a mouth-watering 1.78. To be honest, I don’t think I have ever seen such a high payout ratio. On the earnings per share (EPS) of INR 45.53, the company has distributed a dividend per share (DPS) of INR 77.5. 

Although, there’s no denying that the commodity cycle helped Vedanta to scale to the highest-ever revenue of INR 1,35,332 crores and consequently the highest profit of INR 18,802 crores in FY22, due to which dividends were quite high. Hence, if someone is solely looking at the company’s dividends in the last few quarters must understand the inherent risks in a commodity-based business. But since FY14 (at least), the company never skipped paying dividends to shareholders. 

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  • namami ghosh @namami ghosh
    my portfolio is a mix of dividend, value, and growth stocks... have Vedanta in my portfolio though they are highly leveraged and are a commodity business
    Like 2
    • vinay bhawnani @vinay bhawnani
      hii
      Like 0
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  • CD Singh @CD Singh
    The EPS is 45 and dividend pair DPS is 77. would like to have your view on this. How can and why a co. pays dividends out of past earnings. will it not dent the Price of share?
    Like 2
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      It generally happens when retained earnings are also distributed amongst shareholders via dividends.
      Like 1
    • P C Chowdhury @P C Chowdhury
      So, is it better to buy Vedanta or HZL?
      Like 0
    • Mahendrababu Hosamane @Mahendrababu Hosamane
      both
      Like 0
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