Best High Dividend Paying Stocks in India February 2025 – IOC, Coal India & More

Dividend-paying stocks are shares in companies that regularly distribute a portion of their profits to shareholders in the form of dividends. These dividends are typically paid on a quarterly, semi-annual, or annual basis and provide a steady income stream to investors. The amount of the dividend is usually expressed as a dividend per share or a dividend yield. These stocks are often preferred by income-focused investors, such as retirees, who seek regular cash flow in addition to the potential for capital gains. In this article, check the best high-dividend paying stocks in India for February 2025 based on dividend yield and also learn the pros and cons of investing in dividend-paying stocks and factors to consider before investing in them.

Best High Dividend Paying Stocks in India – February 2025

Note: The best high dividend-paying stocks in India listed here are as of January 24, 2025. The stocks are selected from the Nifty 500 universe and sorted based on the dividend yield.

Overview of 5 Best High Dividend Paying Stocks in India

1. Chennai Petroleum Corporation Ltd

Chennai Petroleum Corporation Limited is involved in the business of refining crude oil to produce and supply various petroleum products and manufacture and sale of lubricating oil additives. In H1 FY 2025, the company’s total income was ₹50,482.20 crore, which dropped from ₹58,456.57 crore. The company’s profit for the period was -₹255.83 crore, declined from ₹2,117.19 crore.

Key Metrics:

• ROCE: 35.54%
• ROE: 33.69%

2. Indian Oil Corporation Ltd

Indian Oil Corporation Ltd, a Maharatna company owned by the Government of India, operates across the entire hydrocarbon value chain. Its diverse business activities include refining, pipeline transportation, and the marketing of petroleum products, as well as research and development, exploration, and production. Additionally, the company is involved in the marketing of natural gas and petrochemicals. Indian Oil holds a dominant position in India’s oil refining and petroleum marketing sector. In H1 FY 2025, the company’s total income was ₹4,19,738.46 crore, which dropped from ₹4,31,814.62 crore. The company’s profit for the period was ₹3,273.85 crore, declined from ₹28,448.38 crore.

Key Metrics:

• ROCE: 24.50%
• ROE: 25.19%

3. Bharat Petroleum Corporation Ltd

Bharat Petroleum Corporation is a public sector company which is involved in the business of refining crude oil and marketing petroleum products. In H1 FY 2025, the company’s total income was ₹3,75,799.53 crore, which dropped from ₹3,76,769.85 crore. The company’s profit for the period was ₹10,061.20 crore, declined from ₹22,449.32 crore.

Key Metrics:

• ROCE: 33.19%
• ROE: 41.59%

4. Coal India Ltd

Coal India Ltd is primarily involved in the mining and production of coal and also operates coal washeries. In H1 FY 2025, the company’s net sales were ₹60,441.43 crore, which dropped from ₹63,050.65 crore. The company’s profit for the period was ₹17,218.35 crore, declined from ₹18,547.03 crore.

Key Metrics:

• ROCE: 28.43%
• ROE: 51.52%

5. Vedanta Ltd

Vedanta Ltd is a diversified natural resource group involved in exploring, extracting and processing minerals and oil & gas. In H1 FY 2025, the company’s revenue was ₹72,410 crore, up by 8% YoY. The company’s profit for the period was ₹10,698 crore, which rose by 232% YoY.

Key Metrics:

• ROCE: 27.25%
• ROE: 9.27%

Best High Dividend Paying Mid-Cap Stocks in India

Note: The best high dividend-paying stocks in India listed here are as of January 24, 2025. The stocks are selected from the Nifty Midcap 100 universe and sorted based on the dividend yield.

Best High Dividend Paying Small-Cap Stocks in India

Note: The best high dividend-paying stocks in India listed here are as of January 24, 2025. The stocks are selected from the Nifty Smallcap 100 universe and sorted based on the dividend yield.

Dividend Yield vs Dividend Ratio

The dividend yield is a financial metric that shows how much income an investor can expect to receive in the form of dividends relative to the price of the stock. It is calculated by dividing the annual dividends paid by the stock price, expressed as a percentage. A higher dividend yield indicates that the stock offers more income for every unit of investment, which can be attractive for income-focused investors.

On the other hand, the dividend payout ratio measures the proportion of a company’s earnings that are paid out as dividends. It is calculated by dividing the annual dividend by earnings per share (EPS). This ratio helps investors understand how much of a company’s profit is being distributed to shareholders, which can indicate financial stability or potential for reinvestment in the company’s growth.

Pros of Investing in Dividend Paying Stocks

• Steady Income: Dividend-paying stocks provide consistent income, making them an option for income-focused investors.
• Potential for Capital Appreciation: Dividend-paying companies can also exhibit long-term growth, offering both income and capital gains.
• Stability and Reliability: Companies that consistently pay dividends tend to be financially stable, which can reduce investment risk.

Cons of Investing in Dividend Paying Stocks

• Lower Growth Potential: Companies with high dividend payouts may reinvest less in their business, potentially limiting growth opportunities.
• Market Sensitivity: Economic downturns or company-specific issues can lead to a reduction or suspension of dividends, impacting investor returns.

Factors to Consider While Investing in Dividend Paying Stocks in India

• Dividend History: Look for companies with a consistent and reliable dividend payout history, signalling financial stability.
• Dividend Yield vs Payout Ratio: Ensure the company’s dividend payout ratio is sustainable and not too high, which might signal financial strain in the future.
• Company’s Financial Health: Assess the company’s earnings growth, debt levels, and cash flow to determine if it can continue paying dividends.
• Industry Performance: The stability of the industry the company operates in also plays a key role in determining dividend sustainability.
• Tax Implications: Understand the taxation policies applicable to dividend income and how they can impact your overall returns.
• Inflation and Economic Conditions: Consider how inflation and market cycles can impact dividend payments, as companies may reduce dividends during tough economic times.

Conclusion

Apart from these, there are several other dividend-paying stocks in India. Understand the business of the company and its financials before investing.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.