5 Best High Dividend Paying Stocks in India – 2019



When it comes to commonly used stock investing jargon; “ dividends” probably holds a top spot. If you are a novice investor who has just started understanding the markets, you might have heard about “ high dividend-paying companies” from your peers or in the news and are probably intrigued about it. Well, it’s time you solidify your vague understanding of dividends! In this article, I will demystify the concept of dividends, explain the various terms associated with it as well as list out the top five highest dividend-paying companies in India in 2019. Read on! 

What Are Dividends?


Let’s assume we have a company A that earns a profit or Rs 100 every year. Now the company has two ways in which it can utilize this profit- either by reinvesting it into the business to fuel future growth or, when the scope of expansion is less, the same profit can be distributed amongst investors. This cash distributed to investors is known as a dividend. It’s important to note that it is not mandatory for a company to pay dividends to its shareholders. Now the dividends payment procedure follows a chronological set of events. Following four dates hence become very important for investors to understand, let’s see what each one means:

Announcement Date:

The announcement date is the date at which a company announces that they are going to give dividends to shareholders, and on the announcement date only does the company announces the other dates as well. On the announcement date, the dividends are to be approved by shareholders before they are disbursed. 

Ex-dividend Date:

Ex-dividend date can be though as the cut-off date for dividend eligibility. That is, if a stock has an ex-dividend date of 11th May, shareholders who purchase stock after that will not be eligible to get dividends. However, shareholders who buy the stock a day prior to the ex-dividend date are eligible for dividends. 

Record Date:

 This is the date where the company identifies which are the shareholders they have to pay dividends to. The record date succeeds the ex-dividend date by a day. This means, if you buy a share of a company a day prior to the ex-dividend date, then the shares will be credited to your Demat account in T+2 days, i.e on the record date.

Another important term you must be familiar with is dividend yield. The dividend yield is the ratio of dividend that is paid per share to the current market price of share. The formula is as follows :-

Dividend Yield= Cash Dividend per share/ Market price of share*100

So dividend yield indicates the amount of cash you are getting back for each rupee you invest in the stock, in short, the return on investment.

Now that we are clear with the most frequently used terms with respect to dividends, let’s quickly move on to the list of the highest dividend-paying companies in 2019. 

Vedanta 

Vedanta Limited is a subsidiary of Vedanta Resources Limited. It is a leading diversified natural resources company with presence across India, South Africa, Namibia, and Australia. The company is a leader in Oil and Gas, Zinc, Lead, Aluminium, Copper, Silver Iron ore and Power.  For its sustainability efforts, the company has been awarded the CII-ITC Sustainability Award, FICCI CSR award, Dun and Bradstreet award in metal and mining, etc. Currently, Vedanta’s market cap is 53,000 Crores. In the past one year, Vedanta has given its shareholders a dividend of Rs 18 per share, with a dividend yield of 13%. The share price of Vedanta has come down by 26% in the past one year. Consequently, the net returns is a loss of 13% .

BSE Limited 

The next in line is BSE limited. Bombay Stock Exchange Limited is a stock exchange company based out of India. The company comprises of two business segments; facilitating the trading of securities and extended activities as well as depository related services. BSE Limited is a stock that trades on the National Stock Exchange. If we talk about the dividends BSE has given the past year, it stands at Rs 30 per share. The dividend yield is 6%. The stock has given a return of -18% in the past one year. This makes the net returns at -12%.

Coal India Limited 

The third company in the list of highest dividend issuers is Coal India Limited. Coal India Limited is an Indian coal mining company based out of Kolkata, West Bengal. This Maharatna company is the largest coal producer in the world, contributing about 82% of the total coal production in India. Needless to say, it has a monopoly over the coal business. Coal India’s IPO was the biggest IPO in India. As far as dividends are concerned, in the past one-year coal India has disbursed dividend of Rs 30 per share to its shareholders. The dividend yield stands at 6.8 and the share price performance has been -20%.

REC Limited

REC Limited ( erstwhile Rural Electrification Corporation Limited) is a Navratna company involved in financing the public infrastructure of India’s power sector. This PSU finances PAN India rural electrification projects. The company also lends to Central/State Sector power utilities, Rural electric cooperatives, state electricity boards, and other private power producers.  In the past year, REC Ltd has given a dividend of Rs 11 per share with a dividend yield of 8%. In terms of the performance of the share price, the company has shown a positive 30% increase. The net returns hence stand at 38%. 

Indian Oil Corporation Limited 

The final company in this list is IOCL or the Indian Oil Corporation Limited. IOCL is a government-owned oil and natural gas company based out of New Delhi. It’s India’s largest commercial oil company. In the past one year, IOCL has disbursed dividend of Rs 9 per share. The dividend yield was around 7.42% while the share price performance has been a -7%. This translates to a net profit of 0.42% fetched by the company. 


So here was a list of the highest dividend-paying companies of 2019. Now the important question that needs to be answered is, who should consider investing in high dividend companies?  The answer varies for investors as the investment objectives and risk profile varies. Going for high dividend-paying companies makes sense for those investors who have a low-risk profile as well as want to receive a regular income from the stock market. However, investing in high dividend-paying companies doesn’t make sense for investors looking for high growth potential companies. Because high growth companies are still expanding, they reinvest their dividends instead of paying to the investors. So pick companies based on where your interests lie and according to the outcome you are looking for. Needless, to say investing in high dividend-paying companies can be a good option if you are looking for a steady source, you can use the dividend income to create a corpus for your long term goals like retirement. An interesting fact about dividend income is India is that the dividend income is tax-free. Yes, you read that right. As per section 10(34) of the Income Tax Act, dividend income received from an Indian company by an Individual or HUF is exempt from ax as the company declaring dividends has already deducted DDT ( dividend distribution tax) before disbursing dividends. Whether you decide to take a lesser risk with high dividend stocks or take an aggressive stance by investing in a high growth company, be sure to do your research well and keep a long term perspective.

Happy Investing!










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