Two Dividend Stocks with Better Returns

  • Stock Market Analysis
  • Editors Pick

Typically, investing in stocks is associated with generating wealth. Whenever we talk about return or yield, investors consider the difference between selling and buying prices. However, they don’t realize that a return on a stock has two aspects: capital appreciation and dividends generated during the holding period. Usually, they tend to ignore the second aspect and chase only those stocks where they see substantial value growth.

Companies that distribute dividends regularly are known as dividend-paying stocks. Here also, there is a catch. As an informed investor, you should opt for stocks with a consistent track record of dividend payment, dividend growth, and capital appreciation. We understand it’s challenging to find such stocks, and however, some companies have offered decent returns and dividend/dividend growth. Here, we will take a look at two stocks that fit the above criteria.

1. Housing and Urban Development Corporation Ltd (NS: HUDC )

The Housing and Urban Development Corporation Limited is a government entity under the Ministry of Housing and Urban Affairs, Government of India. The company’s cash and cash equivalents have grown consistently from Rs 47.54 crore in FY2017 to Rs 1,286.12 crore in FY2021. Notably, Hudco Ltd saw a net increase in cash and cash equivalent of Rs 1,063 crore in fiscal 2021. Its net cash from operating activities stood at Rs 2,160.9 crore in fiscal 2021 against Rs 1,336.2 crore used in operating activities in Fiscal 2020. Its total income was Rs 1,798.3 crore in Q1FY2022 against Rs 1,781.8 crore in the corresponding quarter of fiscal 2021. During the period under comparison, Net profit doubled to Rs 404.6 crore from Rs 203.4 crore in the first quarter of fiscal 2021.

The company has a good dividend track record and has consistently paid dividends for the last five years. In fiscal 2021, Housing and Urban Development Corporation declared an equity dividend of Rs 2.17 per share. At the current share price of Rs 44.9, it results in a dividend yield of 4.84%. The stock has returned 36.5% in a year, 9.3% year-to-date, and 6% in a month. Critical technical indicators such as RSI, MACD, and 10-day/20-day/50-day/200-day EMA signal a ‘buy on the stock.

2. RITES Ltd (BO: RITS )

RITES stands for Rail India Technical and Economic Service. Established in 1974, the company is under Indian Railways, Ministry of Railways, Government of India. It is an engineering consultancy services provider specializing in the transport infrastructure domain.

The company’s operating cash flow jumped to Rs 468.15 crore in fiscal 2021 from Rs 266.81 crore in fiscal 2020. It translates into a year-on-year growth of 75.9%. In Q1FY2022, RITES’ total income remained almost unchanged at Rs 377.2 crore compared to the corresponding quarter in fiscal 2021. However, its profit after tax grew 19.8% year-on-year to Rs 77.8 crore from Rs 65 crore in Q1FY2021.

For the year ending March 2021, RITES has declared an equity dividend of Rs 13 per share. At the current share price of Rs 287, it results in a dividend yield of 4.52%. The company has consistently declared dividends for the last five years. In a year, the stock delivered 15.3% returns. Its year-to-date returns were 5.3%, and the same was 18.2% in the last six months. The scrip’s yield remained 4.7% and 5.1% in a month and five-day period, respectively. Major technical parameters such as RSI, MACD, and 50-day/100-day/200-day EMA indicate a ‘buy on the scrip.

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  • jay patel @jay patel
    but the company share dividend that growth is less than those are not giving dividend. pls give your points
    Like 0
    • Sameer Padole @Sameer Padole
      @jay patel These stocks have better dividend yield and capital appreciation. Far more than normal FD.
      Like 2
    • Naseem As @Naseem As
      Oppp
      Like 0
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