In emerging markets like India, companies are in a high growth phase. Companies in the high growth phase tend to pay a low rate of dividends. Hence, their dividend payout is low. Very few companies have a high dividend payout ratio. Apart from it, it is hard to find companies that consistently increase dividends every year. For regular income seeker investors, it is essential to see whether dividends are growing each year. It indicates the ability of the company to generate and increase operating cashflows year-over-year. High dividend-paying stocks help investors to create a source of passive income. Hence, these investors should regularly consider scout for opportunities to create a steady source of income. Here we have come up with three stocks that have paid dividends in the past five years and consistently grown them annually.
1. Oracle Financial Services Software (NS: ORCL ) Ltd
The first name in the above-discussed group is Oracle (NYSE: ORCL ) Financial Services Software Limited. The company provides transaction processing and accounting software for banks, investment managers, and mutual funds. It offers comprehensive IT solutions to the BFSI (Banking, Financial Services & Insurance) industry across the globe.
In the last five years ended March 2021, the company has consistently paid and grown dividends year after year. From Rs 100 per share in 2016, OFSSL's dividend grew to Rs 200 per share in 2021. For the year ended March 2021, the company has declared an equity dividend of Rs 200 per share. At the closing share price of Rs 4,786 on September 10, a dividend yield of 4.2%. Its operating cash flow grew 71.2% to Rs 1,919.51 crore in FY2021 from Rs 1,121.13 crore in FY2017. The robust growth points towards OFSSL's ability to grow its dividends in the future.
In Q1FY2022, Oracle Financial Services' net profit jumped 9.3% year-on-year to Rs 524.19 crore from Rs 479.79 crore in Q1FY2021. Mutual funds marginally increased their holding in June 2021 quarter. The stock gained 64.7% in a year, 47.6% in year-to-date, ~50% in six months, 7.6% in a month, and 1.6% in five days. It confirms a bullish trend in the share that trades at a 1.8% discount to its 52-week high.
2. VST Industries (NS: VSTI ) Ltd
VST Industries Limited has more than 90 years of vintage in the Indian tobacco industry. The company manufactures and markets cigarettes as well as trades unmanufactured tobacco. The company has a good dividend track report and has consistently declared dividends for the last five years. From Rs 70 per share in FY2016, the company's dividend amounted to Rs 114 in FY2021. The year ended March 2021 has declared an equity dividend amounting to Rs 114 per share. At the closing share price of Rs 3,419, this results in a dividend yield of 3.33%.
The company's operating cash flows almost doubled to Rs 286.17 crore in FY2021 from Rs 145.69 crore in FY2017. It reflects on VST Industries' ability to sustain and grow its future dividend payouts. Although the stock delivered 49% returns in the last five years, its returns were slightly negative in the previous year, year-to-date, and six-month period.
3. Hero Motocorp (NS: HROM ) Ltd
Hero Motocorp is the world's largest manufacturer of two-wheelers based in India. In 2001, the company achieved 'World No. 1' two-wheeler company in terms of unit volume sales in a calendar year. Notably, it continues to maintain this position to date. The company has a good dividend track report and has consistently declared dividends for the last five years. For the year ended March 2021, Hero Motocorp has declared a dividend amounting to Rs 105 per share. At the closing share price of Rs 2,799.10 on September 10, a dividend yield of 3.75%.
Mutual Funds have increased holding by 1.64% in June 2021 quarter. The steady growth in operating cashflows barring FY2020 and subdued future business prospects make a case for Hero Motocorp for regular dividend seekers.
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