Two Power Stocks with Better Dividend Yield and Returns

  • Stock Market Analysis

According to the Ministry of Power’s data, electricity consumption in August 2021 rose 18.6% to 129 billion units from 109.21 billion units in the same month a year ago. The growth was on account of increased economic activities resulting from relaxation in lockdowns. The second Covid-19 wave in March to May impacted the economic recovery process resulting in dwindled demand for commercial and industrial power. Lockdowns were put in place by many state governments on account of the second Covid-19 wave outbreak negatively impacted power demand. We endeavour to come up with stocks with a good dividend track record and better yields. Our two picks are in the utility sector, as discussed above. These two stocks have generated decent returns in the past and offer better dividend yields.

1. CESC (NS: CESC ) Ltd

Founded in 1899, CESC is India’s first fully integrated electrical utility company. The company is the sole distributor of electricity within 567 square kilometres of Kolkata and Howrah. It serves 2.9 million consumers, including domestic, industrial, and commercial users. The company has a good dividend track record and has consistently declared dividends for the last five years. For the year ending March 2021, CESC declared a dividend of Rs 45 per share. The closing share price of Rs 830.45 on September 9 results in a dividend yield of 5.42%. The stock yield for one year remained at 27.2%, whereas the same was 33.8% for year-to-date. CESC delivered a return of 32.7% in six months and ~10% in a month. Operating cash flow exhibited a steady rise year-on-year except in FY2021 due to the pandemic effect. It is expected to rise further with growing economic activities, supporting a steady and potential increase in dividend pay-out.

In Q1FY2022, CESC’s total income jumped 26% year-on-year to Rs 2,040 crore from Rs 1,619 crore in Q1FY2021. EBITDA grew 60.3% to Rs 420 crore from Rs 262 crore in April-June 2020. Its reported PAT grew 3% to Rs 138 crore from Rs 134 crore a year ago. Promoter’s holding remained constant in June 2021 quarter. Vital technical indicators such as Moving average convergence divergence (or MACD) and 20-day/50-day/100-day EMA indicate CESC stock ‘buy.’

2. NHPC Ltd (NS: NHPC )

Established in 1975, NHPC Limited (NS: NHPC ) is an Indian Hydropower generation company. It is a Mini Ratna Category-I Enterprise of the Indian government. NHPC is among the top ten companies in the country in terms of investment. The company has a good dividend track record and has consistently declared dividends for the last five years. For the year ending March 2021, it announced a dividend of Rs 1.6 per share. The closing share price of Rs 27.40 on September 9 results in a dividend yield of 5.84%. The stock returned 32.4% in a year, 18.6% in year-to-date, 11.6% in six months, and 5.4% in a month.

The stock’s MACD, RSI, and 30-day/50-day/100-day EMA indicate a ‘buy signal on the technical front. Promoter’s holding remained constant at 70.95% in June 2021 quarter. Notably, FIIs/FPIs, MFs, and DIIs have marginally increased holding in the same quarter. NHPC trades at a 4.2% discount to its 52-week high of Rs 28.60. 

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  • Pothineni ramesh babu @Pothineni ramesh babu
    Timely giving good information , Thank you
    Like 0
  • Samip Panigrahi @Samip Panigrahi
    I already own CESC and will continue to do so..Thanks sir..
    Like 1
  • arun Achanna @arun Achanna
    what about power grid, India grid ? sir
    Like 0
  • Sandeep Vani @Sandeep Vani
    Thanks
    Like 0
  • Ranjit Kumar Jain @Ranjit Kumar Jain
    thanks for posting a bit lateafter all breakoutsmay God bless you
    Like 0

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