Two Frequent Dividend Paying Stocks to Add in Portfolio

Companies that distribute dividends regularly don’t necessarily witness an erosion in their stock prices. On the contrary, companies that don’t pay dividends at all may see a fall in their share prices over a period of time due to mismanagement and under-assessment of business risk, etc. Companies that don't pay dividends on shares typically reinvest the undistributed funds into the expansion and overall growth. This may mean that, over time, their stock prices are likely to see value appreciation. High-dividend stocks can be a good choice.

However, in India, there aren’t many companies paying high dividends. Except for PSUs in the oil & gas, transportation, and power utility domain, the rest don’t pay a high dividend. In fact, there are many companies that even don’t pay dividends on a regular basis. Indian equity markets unlike their US and European counterparts are in a nascent stage. In an emerging nation like us, growth remains on the top of the mind of companies. However, there are a few companies that pay dividends on a regular basis. Some of them even pay dividends more than once a year. We have come across two companies that pay dividends more than once a year.  

1. Embassy Office Parks REIT (NS:EMBA)

Embassy Office Parks REIT operates as a real estate investment trust. The company acquires and develops commercial buildings, offices, IT parks, and industrial areas in India. What is noteworthy about the company is its occupancy rate. Embassy was able to maintain its occupancy over 90% and also garnered robust rentals during the pandemic period when India was in complete lockdown for nearly three months and in partial lockdown for some months. The REIT maintained an occupancy level of 89% at March 2021 end along with achieving 99% rental collection. Embassy Office Parks enjoys a pool of properties in prime localities, a wide customer base, and a healthy balance sheet. 

In Q1FY2022, Embassy Office Parks REIT reported a 36% year-on-year increase in net operating income to Rs 621.3 crore from Rs 456.9 crore in Q1FY2021. In FY2022, the company has declared a distribution of Rs 5.6 per unit each time four times so far. The company’s dividend yield is 6.31% against the industry average of 3.98%. The REIT stock has a ‘buy’ recommendation based on key technical parameters such as RSI, MACD, and 20-day/50-day/100-day/200-day EMA. Embassy Office Parks stock price corrected sharply as the pandemic kicked in. However, we believe that it should take a departure from the current side-ways pattern and move upwards as we continue to witness increasing normalcy and the resumption of work-from-office culture across India. 

2. PTL Enterprises Ltd (NS:PTLE)

PTL Enterprises Ltd is a plant lessor to Apollo Tyres Ltd (NS:APLO) where the latter is the lessee. PTL's plant manufactures and produces tires for automobiles, commercial vehicles, and other speciality automotive. PTL also has interests in the healthcare business via multiple private companies under the brand—Artemis. The company’s net operating cashflows displayed an increasing trend till FY2020 amounting to Rs 46.23 crore, although it declined to Rs 40.3 crore in FY2021.

In fiscal 2021, PTL Enterprises declared dividends amounting to Rs 5 per share. At the closing price of Rs 50.20 on October 14, its dividend yield come at 10%. The company has a good dividend track record and has consistently paid dividends for the last five years. Promoters holding remained unchanged at 69.8%. However, DIIs have marginally increased their holding in PTL Enterprises in September 2021 quarter. The share has a ‘buy’ view based on major technical parameters such as RSI, MACD, and 20-day/50-day/100-day/200-day EMA. PTL stock returned 40.6% in a year, 14% year-to-date, 34.6% in six months, 5.6% in a month, and 6% in five days. Hence, it is a decent combination of a higher frequency of dividends and capital appreciation.