Top 10 dividend-yielding stocks in a bearish market (2024)

According to HDFC Securities, in bearish times, a dividend-yielding strategy is a good way to invest.

The broker cited historical data that reveals high dividend yield stocks tend to perform better in bear markets than other stocks.

In HDFC Securities' view, high dividend-paying companies are generally mature firms with fewer reinvestment needs and steady cash flows. Many dividend-paying stocks, typically, are part of defensive sectors that are likely to weather heightened volatility and economic downturn better than cyclical sectors. Businesses that don’t need their profits to reinvest in their business and return them to shareholders in line with a clear pay-out policy seem to be safe-haven stocks in such times.

Exposure to dividend-yielding stocks should be considered for generating regular income and downside protection rather than to maximize returns, the broker said.

Here is a list of companies that offer a dividend yield of 3.00% and above, as per HDFC Securities.

1. REC:

Government-owned public infrastructure finance firm, REC has the highest dividend yield of 13.8%. In FY22, REC made total dividends of ₹15.30 per equity share on the face value of ₹10 each. Thereby, REC's dividend payout stood at 153% in this fiscal. The company has an equity of ₹1,974.9 crore with earnings per share (EPS) of ₹50.8.

2. SAIL:

Another government-owned company but in the segment of steel production, SAIL has a dividend yield of 13.5%. In FY22, the company paid an 87.5% dividend. It currently has paid-up equity capital worth ₹4,130.5 crore and an EPS of ₹30.3 per share.

3. Power Finance Corporation (PFC):

PFC is a power finance institution owned by the government, offering a dividend yield of 12.2%. PFC is a parent company of REC.

In the fiscal FY22, PFC gave a 120% dividend to its shareholders. It has a paid-up capital of ₹2,640.1 crore and earnings per share of ₹53.1.

4. PTC India:

This power trading solutions provider is a public sector undertaking (PSU) and offers a dividend yield of 10.4%. In FY22, the company gave a 75% dividend. It currently has a paid-up capital of ₹296.0 crore with an EPS of ₹14.7 per share.

5. Coal India:

This government-owned is the largest coal producer in the world, offering a dividend yield of 9.6%. It had paid 170% dividend in the financial year FY22. Currently, it's paid-up capital is around ₹6,162.7 crore with an EPS of ₹28.2 per share.

6. Housing and Urban Development Corporation (HUDCO):

This government-owned firm provides techno-financing in the housing and infrastructure development segment. It offers a dividend yield of 8.5%. It has a paid-up capital of ₹2,001.9 crore with an EPS of ₹8.6 per share. In the fiscal FY22, the company paid a 27.5% dividend to its shareholders.

7. PNB Gilts:

This Punjab National Bank-backed company is a dealer in the institutional infrastructure of the Government Securities market. It offers a dividend yield of 8.5% as well. Currently, its paid-up capital is around ₹180 crore with an EPS of ₹8.9 per share. Last fiscal, the company paid a 50% dividend to its shareholders.

8. Indian Oil:

Having a paid-up capital of ₹9,414.2 crore with an EPS of ₹26.7 per share, this oil marketing company offers a dividend yield of 8.2%. Last fiscal, the company paid a dividend of 84% to its shareholders.

9. ONGC:

The country's largest government-owned oil and gas explorer and producer, ONGC gives a dividend yield of 7.8% to investors. At present, the PSU's paid-up equity capital is worth ₹6,290.1 crore with earnings per share of ₹37.4. ONGC paid a dividend of a whopping 210% in the financial year FY22.

10. Rites:

Indian Railways-backed Rites specialises in the field of transport infrastructure. The company offers a dividend yield of 7.5%. It has a paid-up equity capital of ₹240.3 crore with earnings per share of ₹21.5. In FY22, the company paid its shareholders a dividend of 170%.

Other companies:

As per the broker's report, Standard Industries offers a dividend yield of 7.4%, while RSWM gives 7.3%, IRFC gives 7.2%, National Aluminium provides 7.1% and Hindustan Zinc gives 7.0%.

Companies like Geojit Financial Services, PTL Enterprises, HPCL, SJVN, CESC, Shree Digvijay Cement, Oracle Financial Services, Puravankara, Oil India, Karnataka Bank, Rail Vikas, Balmer Lawrie, Ador Fontech, and Bajaj Consumer - offers dividend yield between 6.1% to 6.9%.

Further, firms like Tata Steel, Redington India, Power Grid, ICICI Securities, Cochin Shipyard, NMDC, Heidelberg Cement, Union Bank of India, BPCL, Castrol India, Polyplex Corp, Indus Tower, MSTC, RCF, NTPC, and Phillips Carbon Black - gives dividend yield ranging from 5% to 5.9%.

Bank of India and Glenmark Life give a 4.9% dividend yield each. While companies like Uniphos Enterprises, Tide Water Oil, and Indraprastha Medical give a dividend yield of 4.8% each.

These are 50 companies offering high dividend yields with major public sector undertakings (PSUs) taking the lead.

A dividend yield is a financial ratio displayed as a percentage that measures the amount of money a listed company paid as dividends to shareholders for holding their stocks relative to the market value per share. Generally, mature companies are most likely to pay dividends to their shareholders.

On Wednesday, Sensex closed at 53,026.97 down by 150.48 points or 0.28%. Nifty 50 slipped by 51.10 points or 0.32% and ended at 15,799.10. Banking stocks were the worst hit with Bank Nifty finishing at 33,269.90 diving by 372.55 points or 1.11%. Midcap stocks were also under pressure. India's Volatility Index jumped more than 2%.

Vinod Nair, Head of Research at Geojit Financial Services said, "Consumer confidence is declining rapidly due to the uncontrolled & constant rise in inflation. India had to bear the double whammy effect of a dampening global equity market and rising crude prices as major suppliers like Saudi are unable to boost the output in the short term. However, the domestic market was able to recover most of the losses due to the strong movement of index heavyweights, PSUs, Metals, and Oil & Gas stocks before slipping some gains by the end of the day due to volatile global market."

Nifty 50 is expected to be under pressure in the near term. Rupak De, Senior Technical Analyst at LKP Securities said, "The trend is likely to remain sideward to a bit negative for the near term. Any fall below 15650 might pave the way for a serious correction in the market. Resistances on the higher end, are placed at 15900/16000."

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Published: 29 Jun 2022, 05:59 PM IST