When a listed company earns profits, there are two ways to utilise the gains. Firstly, they can either reinvest the profits into the business, or the second option can be to share it with shareholders which are called a 'dividend'. Companies announce their dividends for a financial year, in a periodic format, and pay to the eligible shareholders. These dividends can be a source of passive income on your stock investments. Generally, a company with a high dividend yield is considered to be safe.
Dividend stocks are companies that pay out regular dividends. Dividend stocks are usually well-established companies with a track record of distributing earnings back to shareholders. A dividend can be described as a reward that publicly-listed companies extend to their shareholders. Dividends are sourced from company’s net profits.
Buying dividend stocks can be a great approach for investors looking to generate income or those simply looking to build wealth by reinvesting dividend payments. This strategy can also be appealing for investors looking for lower risk.
Highest dividend stocks
Whether to generate income you'll use today, or as capital you can reinvest to increase your wealth, there's a good chance you're looking for a big dividend payout. If you're hoping to maximize the amount of dividends you earn, here are some suggestions,
Vedanta
Vedanta shares will turn ex-dividend next week ahead of the record date. The company has announced a 1,950% dividend for the fiscal year FY23. Next week, Vedanta will determine eligible shareholders for the dividend and later carry out the payment process.
In FY22, the company had declared a total dividend of ₹45 per equity share having a face value of Re 1 each. The company's payment of dividends to equity holders in the fiscal was to the tune of ₹16,681 crore compared to ₹3,519 crore in FY21.
Power Finance Corporation (PFC)
Shares of power sector finance PFC have dropped nearly 33 per cent from its 52-week high amid weak market conditions. Brokerages see an upside of 62 per cent on an average in the stock. The PSU stock's dividend yield stands at 12.2%.
Coal India
Unlike many other PSU stocks with high dividend yields, mining stock Coal India has been among the top performers recently. Its shares have rallied nearly 29 per cent in 2022 and on top of it the dividend yield stood at 9.6%.
GAIL
Gail enjoys a dominant position in the natural gas transmission business with a market share of 70, catered to by its large pipeline network covering 14,381 km. The setting up of pipelines requires large investments and navigating a complex regulatory framework. Going forward, the demand for natural gas is expected to remain healthy driven by the City Gas Distribution (CGD) and the fertilizer sector.
ITC Ltd
ITC Ltd which was earlier known as Imperial Tobacco Company, started as a cigarettes manufacturing company with brands like Goldflake, Flake, Classic under its banner. It has expanded into education and stationery products, hospitality, paperboards and packaging, among others. Acquisition of Sunrise Foods Pvt Ltd is expected to strengthen its market position in the spices segment and further improve diversity.
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