Investors are constantly looking for avenues that offer a mix of capital appreciation and consistent income. One such avenue that has stood the test of time is investing in dividend-paying stocks. Dividend stocks provide a steady stream of income in the form of regular dividend payouts, making them an attractive option for long-term investors. In this blog, we will look into the top 10 highest dividend-paying stocks in India for the year 2023.
What is a Dividend?
A dividend is a distribution of profits that a company makes to its shareholders as a return on their investment in the company’s stock. Essentially, it represents a portion of the company’s earnings that is distributed to its shareholders on a regular basis, usually quarterly or annually. Dividends are typically expressed as a per-share amount, and shareholders receive them in proportion to their ownership of the company.
What is Dividend Yield?
Dividend yield is a financial metric that expresses the annual dividend income generated by an investment relative to its current market price. It is calculated by dividing the annual dividend per share by the current market price per share and is expressed as a percentage. Essentially, dividend yield provides investors with insight into how much cash flow they can expect to receive from their investment in the form of dividends. A higher dividend yield can be attractive to income-focused investors, as it indicates a higher return on investment in terms of dividend income.
Formula of Dividend Yield
Here is the formula for calculating the dividend yield of a stock:
Dividend Yield (%) = Annual Dividends Per Share ÷ Price Per Share
Example: If a company’s dividend yield is 7% and you own Rs 1,00,000 of company stocks. In this case, your annual payout amount is Rs 7,000.
What are the Highest Dividend Paying Stocks in 2023?
Indian stock market grew at a healthy rate in this calendar year despite global adversaries and the effects of major global events. Nifty for example, has grown by 10% this year with a lot of mid-cap and small-cap stocks outperforming the global trends.
Here is the list of the highest dividend-paying stocks of 2023 with their dividend yield, share price, and more:
|Share Price (Rs)
|Dividend Yield (%)
|INEOS Styrolution India Ltd
|Indian Oil Corporation Ltd
|Rural Electricity Corporation Ltd
|Power Finance Corporation Ltd
|National Mineral Development Corporation Ltd
|Steel Authority of India
|Bharat Electronics Ltd
|National Thermal Power Corporation
|Union Bank of India
Benefits of Investing in High-Dividend Paying Stocks
- Steady Income Stream: One of the primary benefits of investing in high dividend-paying stocks is their consistent income stream. Companies that regularly distribute a portion of their profits as dividends offer investors a reliable and predictable source of cash flow. This can be particularly attractive for those seeking regular income to fund living expenses or to reinvest in other opportunities.
- Potential for Capital Appreciation: In addition to the income component, high dividend-paying stocks may offer the potential for capital appreciation. Companies with the ability to generate surplus profits for dividend payments often possess strong fundamentals, making them attractive from a growth perspective as well. This dual benefit can provide investors with a well-rounded return on their investment.
- Inflation Hedge: Dividend income has the potential to act as a hedge against inflation. While the purchasing power of a fixed amount of money tends to erode over time due to inflation, companies that regularly increase their dividends may help investors keep pace with or even outpace inflation. This can be particularly valuable for long-term investors looking to preserve the real value of their investment income.
It’s important to note that, like any investment strategy, investing in high dividend-paying stocks comes with risks. Investors should conduct thorough research, considering factors such as the company’s financial health, dividend sustainability, and overall market conditions, before making investment decisions.
Can NRI invest in the Indian stock market?
Yes. Non-Resident Indians (NRIs) can invest in the Indian Stock Market by buying stocks listed on the National Stock Exchange of India Ltd. (NSE). To be eligible to invest in stocks, NRIs need to have a PIS Account under the Portfolio Investment Scheme* (PIS) that will allow them to trade stocks. *(Portfolio Investment Scheme (PIS): Through this scheme of the Reserve Bank of India, NRIs can purchase and sell shares and debentures of Indian companies on a recognized stock exchange)
Also read: Best Monthly Interest Paying Bonds for NRIs
What is Equity Investment for NRIs?
NRI investors who are ready to take some risk in the stock market can consider investing in equity. Non-resident Indians can directly invest in the stock market in India under the Portfolio Investment Scheme (PIS) of the RBI.
NRIs need to have the following accounts for equity investments:
- Non-Resident External (NRE) Account
- Non-Resident Ordinary (NRO) Account
- NRI Demat Account
- NRI Trading Account with a registered broker
Dividend income and the capital gains earned by NRIs from shares and equity-oriented schemes of mutual funds are taxed in India. Find the capital gains tax on shares purchased by NRIs.
Investing in high dividend-yielding stocks can be a prudent strategy for investors seeking a combination of income and potential capital appreciation. However, it’s crucial to conduct thorough research and consider various factors, including the company’s financial health, industry trends, and management policies, before making investment decisions. As with any investment, diversification and a long-term perspective are key to building a resilient and rewarding portfolio.
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What is a dividend?
- A dividend is a distribution of profits made by a company to its shareholders. It is typically expressed as a per-share amount and is a way for companies to share their earnings with investors.
How is dividend yield calculated?
- Dividend yield is calculated by dividing the annual dividend per share by the current market price per share and expressing the result as a percentage. It provides insight into the income generated by an investment relative to its market value.
Why do companies pay dividends?
- Companies pay dividends to reward shareholders for their investment and to attract and retain investors. It’s a way for companies to share profits and demonstrate financial stability.
Are high dividend-paying stocks less risky?
- While high dividend-paying stocks can provide a steady income stream, they are not inherently less risky. Investors should consider various factors, including the company’s financial health and sustainability of dividends, to assess the overall risk of the investment.
Can dividend payments change over time?
- Yes, dividend payments can change based on the company’s financial performance and decisions by the board of directors. Some companies may increase dividends over time, while others may decrease or suspend them.
How do dividends benefit long-term investors?
- Dividends can benefit long-term investors by providing a regular income stream and the potential for capital appreciation. Reinvesting dividends can also contribute to the compounding of returns over time.
Is PIS mandatory for NRI?
- No, PIS permission is not required for an NRO (Non-Resident Ordinary) account. Previously, the NRI had to open NRE and NRO accounts under PIS regulated by RBI.
How can NRIs invest in India?
- Here are the steps an NRI can follow to invest in India:
1. Open an NRE or NRO (Non-Resident Ordinary) bank account: NRIs need to open an NRE or NRO bank account with an Indian bank to invest in India. An NRE account is used for investing foreign earnings that can be repatriated, while an NRO account is used for investments made from earnings in India that cannot be repatriated.
2. Obtain a Permanent Account Number (PAN): NRIs need to obtain a PAN card to invest in India. This card is required for opening a bank account, investing in the stock market, and purchasing property in India.
3. Complete KYC norms: NRIs need to complete the KYC (Know Your Customer) norms by submitting the necessary documentation such as a copy of their passport, address proof, and PAN card.
4. Choose an investment option: NRIs can choose to invest in various options such as stocks, bonds, mutual funds, real estate, and more. NRIs can also invest in the Indian stock market through the Portfolio Investment Scheme (PIS).
5. Ensure compliance with regulations: NRIs need to ensure compliance with all applicable regulations and laws when investing in India.
However, it’s recommended that NRIs consult with a professional financial advisor or tax consultant to ensure compliance.
How can NRI invest in Mutual Funds in India?
- To invest in mutual funds in India, you need to fulfill FEMA guidelines for being an NRI. Some key points for NRI investment in mutual funds are as follows:
- Investment can be made through a Non-Resident External account or a Non-Resident Ordinary account
- Investment is possible in Indian National Currency (INR) only and not in a foreign currency
Can I invest from the USA in India?
- Yes an NRI can invest from the USA in India in various asset classes such as FDs, Mutual Funds, Stocks, etc.
Can NRI invest in SIP in India?
- Yes, an NRI can invest in India through the SIP route. SIP stands for Systematic Investment Plan.