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Generally, it becomes difficult for a small-cap company to maintain a healthy dividend payout, as much of the profits are retained for growth opportunities. However, there are a few companies that are known for their good dividends and are currently trading at a yield of over 5%.
The stocks have been selected from the index to keep the quality in check.
IDFC Limited
IDFC Ltd (NS:) is a non-banking finance company (NBFC) with a market capitalization of INR 20,231 crore and trades at a TTM P/E ratio of a mere 4.75 despite the fact that the stock has delivered an 87.3% return in the last 12 months. This is significantly lower than the sector’s average of 17.71.
The current dividend yield of the stock is extremely high, at 9.49%. However, it should be noted that the company is not very regular in paying dividends, but the current valuation at which it is available makes it a good opportunity to be explored for the next couple of years.
Housing and Urban Development Corporation Limited
Housing and Urban Development Corporation Ltd (NS:) or simply HUDCO is a specialized finance company that caters to the housing sector in the country and has a market capitalization of INR 14,633 crore. Despite a 99.1% return in the last 12 months, the stock is still trading at a TTM P/E ratio of 8.43.
The stock is one of the favorites for dividend seekers all thanks to its consistent and high payouts. The stock is trading at a yield of 5.27%, making it one of the ideal counters for a high-growth dividend portfolio. FIIs have more than doubled their stake this year, from 0.12% to 0.32% in six months ended 30 June 2023.
National Company Limited
National Aluminum Company Ltd. (NS:) is a well-known producer of aluminum, having a market capitalization of INR 17,879 crore. Investors need to note that commodity-based businesses can show high swings in their net P&L and consequently the dividend payout due to the cyclicity of such businesses.
The stock is trading at a TTM P/E ratio of 14.77 and a dividend yield of 5.14%. It is up 30% in the past 12 months and there is support around INR 86 which can be an ideal reference point for investors trying to add it to their portfolios.
Thank you to all who attended the webinar by Aayush Khanna on 13 September. Those of you who missed the session can access the full recording here: https://shorturl.at/rHQYZ
Remember, the once-in-a-lifetime offer of a 65% discount on InvestingPro+ via the coupon code PROW629 is only valid till 30th September 2023 and for new subscriptions only.
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