Which are Best Dividend Stocks in India? How to find a stock which has good dividend payment history? Well, many investors are looking for answers to these questions. To help them I am here with a list of 10 Best Dividend Stocks in India.
First, let’s understand the term dividend and its importance for investors.
What is Dividend?
A dividend is a distribution of a portion of a company’s profits to the shareholders, as decided by the board of directors. In simple terms, the profits that the company shares with its shareholders are called dividends.
Dividends are paid to shareholders directly into their bank account. Dividends are given generally twice in a year – interim and final dividend.
What is the importance of Dividend to the investor?
A dividend is very important for any company. If investors are getting a regular dividend, that means a company’s financial health is good and the company is making profit consistently. It also indicates that a company has competent management capable of delivering results.
Many investors see dividend as a regular source of income for their future such as retirement fund. Higher the dividend better is the company.
A dividend is quantified by dividend yield. A dividend yield is a financial ratio. It is a measurement of cash dividends paid out to the shareholders relative to market price per share. A formula for the calculation of dividend yield is given below.
Dividend Yield = Cash Dividend per share / Market Price per share * 100
Let’s try to understand this by example. Infosys stock price is Rs.1228 and dividend declared by the company for the year ending March 2018 is Rs.25.75 per share. This means a dividend yield of the stock will be 25.75/1228*100 = 2.09%.
Higher the dividend yield means better is the company. This type of company shares a substantial portion of earning with investors. A dividend yield of one company is always compared with other company in the same sector to find out best dividend yield stock.
How to find out Dividend Stocks in India?
After understanding dividend and dividend yield, let’s try to figure out – How to find out Dividend Stocks in India?
There are multiple websites to find out dividend stocks. I recommend using moneycontrol for finding high dividend paying stocks.
Moneycontrol.com is one of the best websites that provides complete information about Indian Stock Market. You can get complete information about any stocks on this website with a click of a button. Moneycontrol also features the highest dividend paying stock in the specific section. To access session of high dividend paying stock click on the link given below.
10 Best Dividend Stocks in India
Best Dividend Stocks are given below –
Who should Invest in Dividend Stocks?
Dividend stocks are for risk adverse investors. If you are a low-risk investor looking for regular income source, you can think of investing in dividend stocks. Dividend stock provides regular dividend as well as capital appreciation of investments.
If you are looking for higher returns and willing take risk, you should not invest in the dividend stock. You should select a high growth stock where a chance of capital appreciation is much higher.