Three Stocks to Hold for Good Dividends and Best Returns

 

Markets are trading near their all-time highs, and the intense inflationary pressures are hovering over the Indian economy. The annual consumer inflation rate in India was 6.26% in June 2021, marginally lower than 6.3% in May 2021. The fixed deposit rates for more-than-365-days-FD in nationalized and private sector banks range between 5.5%-6.5%. It leaves investors searching for better returns on their funds. Dividend-paying stocks come to their rescue when markets are at a very high level or likely to move sideways. Steady and continuous dividend payouts provide cushion to investors and even cater to their on and off monetary needs. We have discovered three stocks that have a consistent dividend payment record. Apart from their consistent dividends, these stocks haven’t displayed any visible capital erosion in the last few years. We have picked up three stocks that are good dividend paymasters.

 

Oil India Ltd 

Oil India is India’s second-largest government-owned hydrocarbon exploration and production company with a Navratna status. The company is involved in the exploration, development, and production of crude oil & natural gas with geographical interests in India’s North East and Rajasthan. It is also engaged in the transportation of crude oil and the production of liquid petroleum gas. Oil India is a fully integrated upstream petroleum company. From March 27, 2020, the company’s shares have displayed an uptrend only.  It has consistently paid dividends in the last ten years. OIL announced a dividend of Rs 3.5 per share on February 11, 2021. Based on today’s closing price of Rs 161, the company’s dividend yield comes to 3.1%. Its dividend payout ratio is 19.7% compared to the industry’s 10.2%.

 

Balmer Lawrie & Co. Ltd. 

Balmer Lawrie and Company traces its roots to a more than 150-year-old partnership firm.  The company is a Miniratna-I public sector enterprise. The company manufactures steel barrels, industrial greases & specialty lubricants and is engaged in corporate travel and logistics services. For the last 20 years, the company has consistently paid dividends. For the year ending March 2021, the company declared an equity dividend of Rs 6 per share. At today’s closing price of Rs 137.6, the dividend yield comes at 4.4%, much better than the peer group’s dividend yield of 1.4%. The company’s dividend payout ratio was 85.3% against the peer group’s 29.7%. Despite being a dividend-paying company, its stock has delivered positive returns over the last few years. Balmer stock fetched a return of 32% in the previous five years, 15% in a year, 8.4% year-to-date, and 19.5% in the last six months. The upsurge in the company’s share price should support a decline in dividend payout in the future.    

 

Hindustan Zinc Ltd.

Hindustan Zinc is India’s largest and the world’s second-largest zinc-lead miner. The company’s mine life is over 25 years, with a reserve base of 150.3 million MT and mineral resources of 297.6 million MT. At present, the company holds a 78% market share in India’s primary zinc industry. Hindustan Zinc is also the 6th largest silver producer globally, with an annual capacity of 800 MT. The company has consistently paid dividends every year since 2001. For the year ended March 31, 2021, Hindustan Zinc has declared an equity dividend of Rs 21.3 per share. At the current share price of Rs 326.5, the dividend yield comes at 6.52%. Note that the company’s stock price fetched 60% in the last five years and 57.4% last year. In the previous six months, the scrip delivered a 21.8% return to shareholders. Hindustan Zinc provides an optimum combination of capital appreciation and dividend gains.

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