Best Dividend-Paying Stocks in India for December 2024: Chennai Petroleum, IOCL, BPCL and More – 5yr CAGR Basis

Investors often choose high dividend-yielding stocks because they provide an additional source of income. In India, many investors favour these stocks for their regular dividend payouts. Dividends make a stock more appealing and provide opportunities for both steady income and potential capital growth. Investing in India’s top dividend-paying stocks can give consistent returns. This article will highlight the top dividend-paying stocks in December 2024 based on 5-year CAGR.

Best Dividend Paying Stocks In India In December 2024- Dividend Yield Basis

Note: The highest dividend-paying stocks are selected from the Nifty 500 universe and have been sorted based on dividend yield as of December 04, 2024

Overview Of Top Dividend Paying Stocks in December 

• Chennai Petroleum Corporation Limited

Chennai Petroleum Corporation Limited is involved in refining crude oil to produce and supply a range of petroleum products. The company also manufactures and sells lubricating oil additives.

For the quarter ending September 2024, Chennai Petroleum Corporation Limited reported a revenue of ₹14,424.86 crore and a net loss of ₹629.49 crore. This is a decline from the previous quarter, where the company had a revenue of ₹20,361.17 crore and a net profit of ₹342.60 crore.

Key metrics: 

• EPS: ₹46.03
• ROE: 9.16%

2. Indian Oil Corporation Ltd

Indian Oil Corporation Ltd, a Maharatna company owned by the Government of India, operates across the entire hydrocarbon industry. Its key activities include refining oil, transporting it via pipelines, and selling petroleum products. The company is also involved in research and development, oil exploration and production, as well as marketing natural gas and petrochemicals. Indian Oil is a leader in India’s oil refining and petroleum marketing sectors.

For the quarter ending September 2024, Indian Oil Corporation reported a revenue of ₹1,95,148.94 crore and a net profit of ₹180.01 crore. This compares to a revenue of ₹2,15,988.76 crore and a net profit of ₹2,643.18 crore in the previous quarter. 

Key metrics: 

• Earning per share (EPS): ₹11.14
• Return on equity (ROE): 9.02%

3. Bharat Petroleum Corporation Limited

Bharat Petroleum Corporation Limited (BPCL) is a major player in India’s oil and gas industry. Although it is owned and managed by the Government of India, the government has been looking to sell its 52.98% stake since 2021. BPCL operates under the Ministry of Petroleum and Natural Gas and is headquartered in Mumbai, Maharashtra. It is the second-largest government-owned oil company in India.

For the quarter ending September 2024, Bharat Petroleum Corporation Limited (BPCL) reported a revenue of ₹1,17,951.69 crore and a net profit of ₹2,397.23 crore. This is a decrease compared to the previous quarter, where the company had a revenue of ₹1,28,103.36 crore and a net profit of ₹3,014.77 crore. 

Key metrics: 

• EPS: ₹30.04
• ROE: 17.09%

4. Coal India Ltd

Coal India Ltd specializes in mining and producing coal, along with operating coal washeries. Its main customers are the power and steel industries, but it also supplies coal to sectors like cement, fertilizers, and brick manufacturing. The company aims to become a global leader in the energy industry while ensuring India’s energy security. It is dedicated to environmentally and socially sustainable growth by adopting the best practices from mining to product delivery.

For the quarter ending September 2024, Coal India Ltd reported a revenue of ₹315.02 crore and a net profit of ₹4,133.97 crore. This is a decrease from the previous quarter, where the company recorded a revenue of ₹389.71 crore and a net profit of ₹87.46 crore.

Key metrics: 

• EPS: ₹27.38
• ROE: 91.47%

5. Vedanta Ltd

Vedanta Ltd. is a diversified natural resources company that explores, extracts, and processes minerals, oil, and gas. It produces and sells a range of commodities, including zinc, lead, silver, copper, aluminium, iron ore, and oil and gas. Vedanta operates in multiple countries, including India, South Africa, Namibia, Ireland, Liberia, and the UAE.

For the quarter ending September 2024, Vedanta Ltd reported a revenue of ₹18,288 crore and a net profit of ₹10,553 crore. This marks an increase from the previous quarter’s revenue of ₹16,715 crore and net profit of ₹4,183 crore. 

Key metrics: 

• EPS: ₹45.85
• ROE: 23.80%

Why Invest in Highest Dividend Paying Stocks in India?

1. Reliable Income: Stocks that pay high dividends provide a steady income, which is ideal for retirees or those looking for regular returns from their investments. Long-term investors can rely on these for consistent cash flow.
2. Capital Appreciation Potential: Dividend-paying companies are often financially stable and established, which can lead to growth in share prices over time. These stocks provide both stability and potential for long-term gains.
3. Stability: Companies that regularly pay dividends tend to be more stable, with less volatility in their stock prices. This helps create a more reliable investment portfolio.

Advantages of Highest Dividend Paying Stocks

1. Lower Risk: Dividend-paying companies are often well-established with steady earnings, making their stocks less risky and more stable.
2. Inflation Protection: Dividend payments typically rise over time, making them a good hedge against inflation, unlike fixed-income investments.

Criteria for Selecting High-Dividend Paying Stocks

1. Dividend Yield: A high yield (usually above 4%) is a key indicator. High-yield stocks are often found in sectors like utilities and consumer goods.
2. Dividend Growth: A company that consistently increases its dividend payments is a good indicator of financial health and stability.
3. Earnings and Cash Flow: Companies with strong earnings and steady cash flow are more likely to sustain dividend payouts.
4. Payout Ratio: This ratio indicates how much of a company’s earnings are paid out as dividends. A healthy payout ratio ensures a balance between rewarding shareholders and reinvesting in the business.
5. Company Financials: Assessing the company’s financial strength, such as balance sheets and credit ratings, is essential to ensure the sustainability of dividend payments.

Strategies for Investing in High-Dividend Paying Stocks

1. Focus on Quality: Invest in companies with strong financials, consistent earnings, and a proven history of dividend payments.
2. Diversify: Spread investments across sectors to reduce risk and ensure a steady income stream.
3. Look for Dividend Growth: Invest in companies that not only pay dividends but also grow them over time.

Risks of High-Dividend Stocks

1. Unsustainable Dividends: Not all high dividend yields are sustainable. Sometimes a high yield is a sign of trouble, such as declining share prices or financial distress.
2. Interest Rate Risk: When interest rates rise, dividend-paying stocks can become less attractive as investors may switch to safer investments like bonds.

Dividend Yield vs. Dividend Payout Ratio

• Dividend Yield measures how much a company pays out in dividends relative to its share price.
• Dividend Payout Ratio shows the proportion of a company’s earnings paid out as dividends. It’s often seen as a better indicator of a company’s financial strength.

Factors to Consider Before Investing

• Payout or Yield Ratio: A high ratio may mean less money is being reinvested into the business.
• Sole Reliance on Ratios: Don’t make decisions based only on yield ratios; consider other factors like earnings and market conditions.
• Yield Fluctuations: Dividend yields can change with share price movements.
• Comprehensive Evaluation: Look at all aspects of a company, including earnings, financial health, and market position, not just the dividend yield.

Conclusion

Investing in dividend-paying stocks can be a smart way to grow wealth over time. These stocks offer regular income and may also increase in value. However, it’s important to do proper research and align your investments with your financial goals.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.