Highest Dividend Paying Stocks in India for 2024: Top High-Yield Dividend Shares for Consistent Returns

Investors prefer investing in high dividend-yielding stocks as they benefit from additional income from dividend-yielding companies. As a result, many investors in India prefer high dividend paying stocks for regular dividend returns. The allure of dividends makes a stock attractive, as does the potential for earnings from regular dividends and capital appreciation. Moreover, investing in India’s highest dividend-paying stocks can ensure a steady income stream and that the company is doing well financially. In this article, we will explore the highest dividend-paying stocks in India, the advantages of investing in these stocks, and key factors to consider before investing in dividend-yielding stocks.

Highest Dividend Paying Stocks in 2024 from Nifty 500

Here are the top 10 highest dividend paying stocks in Nifty 500:

Stock Name	Sub-Sector	Market Capitalization (in Cr)	Share Price	Dividend Yield	PE Ratio	Dividend Per Share
Hindustan Petroleum Corp Ltd	Oil & Gas - Refining & Marketing	₹74,058	₹358.20	9.06	4.62	31.50
Indian Oil Corporation Ltd	Oil & Gas - Refining & Marketing	₹2,39,637	₹170.74	6.90	5.74	12.00
Bharat Petroleum Corporation Ltd	Oil & Gas - Refining & Marketing	₹1,33,517	₹315.95	6.70	4.97	21.00
Vedanta Ltd	Metals- Diversified	₹1,70,484	₹455.50	6.44	40.22	29.50
Coal India Ltd	Mining- Coal	₹3,06,749	₹512.45	5.12	8.20	25.50
Chennai Petroleum Corporation Ltd	Oil & Gas - Refining & Marketing	₹16,152	₹1,212.10	5.07	5.88	55.00
UTI Asset Management Company Ltd	Asset Management	₹13,666	₹1,060.80	4.38	17.85	47.00
Oil and Natural Gas Corporation Ltd	Oil & Gas - Exploration & Production	₹4,05,714	₹322.65	3.80	8.24	12.25
ICICI Securities Ltd	Investment Banking & Brokerage	₹24,976	₹768.85	3.75	14.72	29.00
HCL Technologies Ltd	IT Services & Consulting	₹4,25,046	₹1,569.55	3.32	27.07	52.00

Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.

Note: The data in the list of top dividend yield stocks in India is from 16th July, 2024. This data is derived from Tickertape Stock Screener.

• Stock Universe: Nifty 500
• Dividend Yield: Sorted from Highest to Lowest

🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.

Overview of the Top Dividend Paying Stocks in India

Let us now look at an overview of the top 10 dividend paying stocks in India: 

Hindustan Petroleum Corp Ltd

Hindustan Petroleum Corporation Limited (HPCL), based in Mumbai, operates in India’s petroleum and natural gas industry. It is a public sector undertaking and a subsidiary of the Oil and Natural Gas Corporation, which is owned by the Ministry of Petroleum and Natural Gas, Government of India. Over the last 5 years, the company’s revenue has grown at a yearly rate of 9.51%, higher than the industry average of 8.87%, and its market share increased from 15.46% to 15.91%.

Indian Oil Corporation Ltd

Indian Oil Corporation Limited (IOCL or IndianOil) is a multinational Indian oil and gas company owned by the Ministry of Petroleum and Natural Gas, Government of India. As a public sector undertaking, the Ministry of Petroleum and Natural Gas oversees its operations. Over the last 5 years, the company’s net income has grown at a yearly rate of 19.15%, higher than the industry average of 17.55%.

Bharat Petroleum Corporation Ltd

Bharat Petroleum Corporation Limited (BPCL), an Indian public sector undertaking, is owned by the Ministry of Petroleum and Natural Gas, Government of India. BPCL runs three refineries located in Bina, Kochi, and Mumbai. Over the last 5 years, the company’s net income has grown at a yearly rate of 28.05%, higher than the industry average of 17.55%. 

Vedanta Ltd

Vedanta Limited, an Indian multinational mining company based in Mumbai, primarily operates iron ore, gold, and aluminium mines in Goa, Karnataka, Rajasthan, and Odisha. Over the last 5 years, the company’s revenue has grown at a yearly rate of 9.26%, higher than the industry average of 9.04%, and its market share increased from 84.82% to 86%. 

Coal India Ltd

Coal India Limited (CIL) is a state-owned enterprise managed by the Ministry of Coal, Government of India. Headquartered in Kolkata, it is the largest government-owned coal producer globally. The large-cap has market capitalisation Rs. 3,06,749, as of 16th July 2024. The company’s net profit margin is 24.82%, and its return on equity (ROE) 55.32%. 

Chennai Petroleum Corporation Ltd

Chennai Petroleum Corporation Limited (CPCL), formerly Madras Refineries Limited, is a subsidiary of Indian Oil Corporation Limited. It operates under the Ministry of Petroleum and Natural Gas of the Government of India and is headquartered in Chennai. Over the last 5 years, the company’s revenue has grown at a yearly rate of 9.93%, higher than the industry average of 8.87%, and its market share increased from 2.31% to 2.42%.

UTI Asset Management Company Ltd

UTI Asset Management Company Ltd is an India-based portfolio manager. UTI AMC is the holding company for UTI Venture Funds Management Company, which manages venture funds and UTIInternational Ltd, which markets offshore funds to overseas investors. Over the last 5 years, the company’s net income has grown at a yearly rate of 16.76%, higher than the industry average of 12.76%. 

Oil and Natural Gas Corporation Ltd

Oil and Natural Gas Corporation Limited (ONGC) is a central public sector undertaking in India. It operates under the Ministry of Petroleum and Natural Gas and is headquartered in Delhi. ONGC was founded by the Government of India on 14 August 1956. The largecap company’s market capitalisation is Rs. 4,05,714 cr., as of 16th July 2024. The company’s return on equity is 12.13%, and its cash flow margin is 13.13%. 

ICICI Securities Ltd

ICICI Securities offers various financial services, including brokerage, financial product distribution, and investment banking, and it focuses on retail and institutional clients. Over the last 5 years, the company’s revenue has grown at a yearly rate of 23.94%, higher than the industry average of 11.08%, and its market share increased from 5.06% to 8.18%. 

HCL Technologies Ltd

HCL Technologies is an Indian multinational IT consulting company. It is headquartered in Noida. Founded by Shiv Nadar, HCLTech began in 1991 when HCL expanded into software services. Over the last 5 years, the company’s revenue has grown at a yearly rate of 12.67%, higher than the industry average of 11.53%, and its market share increased from 12.98% to 14.24%.

How to Invest in the Highest Dividend Paying Stocks via smallcase?

Let’s go through a few steps you can follow to invest in high dividend paying stocks in India via smallcase:

1. Log in with any Indian smallcase broker and enter your password on the smallcase app or website.

2. Explore smallcases like the Dividend smallcases by Windmill Capital or the DiviGrowth Capital smallcase managed by Green Portfolio to find out which suits your needs best. After aligning your investment goals with a particular smallcase, make your choice. 
3. Review your personal details and the billing plan before placing an order. Next, click on ‘Invest now’. 
4. Lastly, choose between Monthly SIP or One Time payment method. 
5. Finally, click on ‘Confirm Orders’. 
6. Congrats! You have now invested in high dividend stocks in India!

Dividend Aristocrats smallcase by Windmill Capital

Dividend Stars smallcase by Windmill Capital

High Dividend Yield and Capital Appreciation smallcase by Green Portfolio

Dividend – Smart Beta smallcase by Windmill Capital

• Disclosure for Dividend Aristocrat smallcase
• Disclosure for Dividend Stars smallcase
• Disclosure for DiviGrowth Capital smallcase
• Disclosure for High Dividend Yield and Capital Appreciation smallcase

What is a Dividend?

A dividend is a reward, either in cash or other forms, bestowed upon shareholders by a company. The company’s board of directors determines dividends, subject to shareholder approval. While not mandatory, dividends are typically a share of the company’s profits distributed to its shareholders.

After settling debts, a company may allocate residual profits for shareholder rewards as dividends. However, in cases of cash shortages or the need for reinvestment, dividend giving companies pay dividends and may opt not to pay dividends. When declaring dividends, a company establishes a record date; shareholders registered by that date qualify for a dividend payout based on their shareholding. The company usually dispatches dividend checks to shareholders within a week. Stocks are commonly traded with dividends included until two business days before the record date, after which they become ex-dividend.

What are High Dividend Paying Stocks?

Understanding the best dividend stocks in India involves grasping the concept of ‘dividend yield.’ This term refers to the income investors receive relative to the current stock price. It’s calculated using the formula: 

Dividend Yield = (Annual Dividend / Share Price) x 100

Investors seek out high dividend-paying stocks, those with a higher yield compared to a benchmark. These stocks can provide a reliable income stream, which investors often reinvest to enhance returns or allocate toward long-term goals like retirement.

Investors should evaluate the potential of the best dividend stocks based on their consistent dividend payments and the steady growth in the dividend percentage. This ensures the selection of high dividend Indian stocks that offer both share price appreciation and regular distributions, making them a valuable investment.

Which Sectors Offer the Highest Dividend Paying Indian Stocks?

Our dividend smallcase by Windmill Capital allows you to explore a wide array of investment opportunities in the high dividend paying sector. Investors must take their decisions according to their investment objectives and risk appetite, whether they want a basket heavy on large cap stocks or small or mid cap stocks. They can also choose between term dividend streaks (Dividend – Smart Beta)  and long term dividend streaks (Dividend Aristocrats) while making their decision.  Let us now look at a few sectors that generally offer high dividend paying Indian stocks:

• Financial Sector: The financial sector stands out as one of the most lucrative for investors, with real estate investment trusts (REITs) and related industries contributing to its high average yield. Notably, banks and insurance companies within the sector often offer comparatively lower yields.
• Utility Sector: Favored by dividend investors, the utility sector encompasses diverse industries, including foreign, electric, gas, and water. Despite modest price growth in the last five years, these highest dividend yield stocks are considered defensive due to their stable revenue, which remains unaffected by economic conditions.
• Basic Materials Sector: The basic materials sector presents a high overall dividend yield, primarily propelled by the Oil and Gas Drilling & Exploration and Industrial Metals & Mining industries. However, some sub-industries, such as Aluminum, Silver, and Specialty Chemicals, yield less than 2%.
• Consumer Goods Sector: Led by cigarette and tobacco product industries, the consumer goods sector is renowned for its high yields. Despite the prevalence of low-yield industries, there are still promising investment opportunities within this sector.
• Services Sector: As the largest sector, services encompass stocks from 60 industries, including gaming and shipping. Notably, the average dividend yield in this sector tends to surpass that of the overall market.
• Technology Sector: Comprising 32 industries, the technology sector is spearheaded by the domestic telecom industry, known for its high-yield stocks. While the tech industry is not generally associated with attractive dividends, some companies do incorporate dividends into their financial strategies.
• Healthcare Sector: The healthcare sector offers a varied landscape in terms of dividend yield, with drug manufacturer industries often providing the most favorable returns. Despite this variation, the overall sector’s average yield aligns with the broader market.
• Industrial Goods Sector: Despite having the lowest average dividend yields, the industrial goods sector still offers opportunities for dividend investors to find stocks with decent payouts. Investors should carefully navigate the unique characteristics of this sector to uncover promising investments.

Why Invest in the Highest Dividend Paying Stocks?

As mentioned above, the highest dividend-paying Indian stocks refer to companies paying dividends and the ones with a high dividend yield relative to the market or their peers. Thus, investing in the highest dividend yield stocks in India can be beneficial for several reasons:

• Reliable income: Dividend paying stocks can be a reliable source of income, which can be particularly attractive for those who are retired or seeking regular income from their investments.
• Potential for capital appreciation: Companies that pay dividends are often well-established and financially sound, which can lead to the potential for capital appreciation over time.
• Protection against inflation: Dividends can help hedge against inflation by providing you with a steady income stream that can keep up with rising prices.
• Stability: Dividend-paying companies are often more stable than non-dividend-paying companies, as they typically have strong cash flows and are less likely to experience drastic swings in stock prices.
• Reinvestment opportunities: Dividends can be reinvested into the company, which can help compound your returns over time. 

In addition to the above pointers, investors are advised to do thorough research and/or consult their financial advisor before investing in high dividend-paying stocks in India.

Advantages of the Highest Dividend Paying Indian Stocks

Let’s look at why high dividend stocks can be a potentially good investment option.

• Potential for Higher Total Returns: In addition to dividend income, high dividend stocks also offer the potential for capital appreciation. Historically, high dividend yield stocks have outperformed low or no-dividend stocks, offering higher returns over the long term.
• Lower Risk: Companies paying high dividends tend to be well-established, financially stable companies with consistent earnings. This can make even the best dividend-yield stocks less volatile and less risky than other stocks.
• Inflation Protection: Dividend income can provide a hedge against inflation. Unlike fixed-income investments, such as bonds, dividend payments tend to increase over time, helping to maintain purchasing power in the face of inflation.
• Tax Advantages: In some cases, the best dividend paying stocks may be taxed at a lower rate than other types of investment income, such as interest income. Thus, you can take a tax advantage from dividends.

However, one must consider one’s investment goal and risk appetite before investing in the highest dividend-paying stocks in India.

What is the Criteria for Selecting High Dividend Paying Stocks?

When selecting the highest dividend paying Indian stocks, here are some criteria that you can consider:

• Dividend Yield: A high dividend yield is generally considered 4% or higher, but this can vary depending on the industry and market conditions. You should look for stocks with a consistent history of high dividend yields.
• Dividend Growth: You may also want to consider the growth rate of the company’s dividend payments. A company that consistently increases its dividend payout over time is usually a sign of financial strength and stability.

• Earnings and Cash Flow: It’s important to analyse the company’s earnings and cash flow to ensure it can sustain its dividend payouts. Looking for companies with stable earnings and cash flow growth can be a good idea. 
• Payout Ratio: The payout ratio is the percentage of earnings a company pays out as dividends. A high payout ratio may indicate that the company is paying out more in dividends than it can afford, which could lead to a dividend cut.
• Industry and Market Conditions: Certain industries, such as utilities and consumer staples, are known for paying high dividends. Consider market conditions, such as interest rates and inflation, as these can impact the performance of the highest dividend paying stocks.
• Company Financials: It’s important to analyze the company’s financial statements, such as its balance sheet and income statement, to ensure it has a strong financial position. You must check the company’s debt and credit ratings.

However, investors must do their own research and/or consult their financial advisor before investing.

What are the Strategies for Investing in High Dividend Paying Stocks?

Here are some strategies for investing in the highest dividend paying Indian stocks:

• Focus on Quality: Look for the highest dividend paying companies in India with strong financials, stable earnings, and a consistent history of paying dividends. Companies with a competitive advantage, such as a strong brand or intellectual property, are also good choices.
• Diversify: Since diversification is key, you should consider investing in multiple high dividend stocks across different sectors and industries to mitigate the risk.
• Look for Dividend Growth: Companies that consistently increase their dividends over time and offer capital appreciation.

• Consider Total Return: While dividend income is an important factor, you should also consider a stock’s total return potential, including the potential for capital appreciation.
• Keep an Eye on Industry and Market Conditions: You should consider industry and market conditions, such as interest rates and inflation, which can impact the performance of the highest dividend-paying stocks. 

Investors must always research and/or consult their financial advisors before investing in high dividend stocks.

Risks Associated with High Dividend Stocks

Although the highest dividend-paying Indian stocks can be attractive, it is important to learn more about the risks associated with them.

Fool’s Gold Dilemma

• High dividends might be alluring, but investors must scrutinise the reasons behind the elevated dividend yield.
• A notably high dividend yield could indicate financial distress within the company, with share prices falling due to underlying financial challenges.
• This attractiveness may be short-lived, as companies under financial stress reduce or eliminate dividends to preserve cash, potentially resulting in a further decline in stock prices.

Interest Rate Risk

• High dividend giving stocks are particularly sensitive to changes in interest rates.
• These stocks become more attractive when interest rates are low; however, a shift in monetary policy, such as the Federal Reserve’s rise in interest rates, can alter this landscape.
• As interest rates increase, dividends become less appealing to investors than the potential returns from risk-free government bonds, like Treasury bonds.
• This shift in perception may trigger an outflow from equities, disproportionately affecting most dividend-paying stocks in India over the long term.

Therefore, investors can diversify investments across different asset classes and industries with smallcase to mitigate risks while investing in the best dividend-paying stocks.

Dividend Yield vs Dividend Ratio

A dividend yield tells you the rate of return in cash dividends to shareholders. The percentage represents dividend yield instead of the actual dollar value, making it easier for shareholders to calculate dividend returns based on the percentage value. 

Another popular financial metric for many investors is the dividend payout ratio. 

On the other hand, a dividend payout ratio is the proportion of its net income distributed as dividends as compensation to its shareholders. Generally, dividend payout ratios are regarded as better indicators of a company’s financial strength because they directly relate to cash flow.

Taxation on Dividends in India

Topic	Information
Dividend Tax Exemption	Dividends from Indian companies were exempt until 31 March 2020 because companies paid dividend distribution tax (DDT) before distributing dividends.
Change in Taxation	From 1 April 2020, dividends are taxable for investors. The Finance Act, 2020 removed DDT for companies and mutual funds, and the 10% tax on dividends over Rs.10 lakh.
TDS on Dividends	The Finance Act, 2020 introduced TDS on dividends. The normal TDS rate is 10% on dividends exceeding Rs.5,000. A COVID-19 relief measure reduced TDS to 7.5% from 14 May 2020 to 31 March 2021.
Tax Credit	The deducted tax (TDS) can be credited against the total tax liability when filing the income tax return (ITR).
Resident Example	Mr Ravi received Rs.6,000 in dividends on 15 June 2023. The company deducted 10% TDS (Rs.600), so Ravi received Rs.5,400. The dividend is taxable at FY 2023-24 rates.
Non-Resident TDS	Non-residents face a 20% TDS, subject to double taxation avoidance agreements (DTAA). To benefit from lower rates, non-residents must submit Form 10F, a declaration of beneficial ownership, and a tax residency certificate. Without these, higher TDS applies, claimable when filing ITR.
Interest Deduction	Investors can deduct interest expenses against dividends, capped at 20% of the dividend income. Other expenses like commissions or salaries are not deductible.
Example for Interest Deduction	If Mr Ravi borrowed money to buy shares and paid Rs.2,700 in interest in FY 2023-24, only Rs.1,200 is deductible.

Factors to Consider Before Investing in the Highest Dividend Paying Stocks

Here are a few factors to consider if you are looking to invest in highest dividend paying stocks:

• Payout or Yield Ratio Significance: High ratios imply fewer profits for business reinvestment. A formulaic assessment reveals whether dividends divert significant profits.
• Caution in Sole Reliance on Ratios: Highest dividends of the most dividend paying stocks in India don’t assure future investment success. Ratios are one of several factors in stock investment decisions.Investors must be cautious of relying solely on them to make their investment decisions.
• Dynamic Nature of Yield Ratio: The yield ratio of the top dividend stocks to buy in India fluctuates with changes in share market prices during trading sessions.
• Avoid Fixating on Absolute Dividend Numbers: A share with a close price of Rs. 100 doesn’t inherently indicate a strong company. Similarly, a share with a close price of Rs 10 per share doesn’t necessarily denote a weak company.
• Comprehensive Company Evaluation: When considering high dividend shares, investors should look beyond dividends. They can consider earnings, outstanding shares, and shareholders. Metrics such as ratios can be crucial in evaluating high dividend yield stocks in India.

To Wrap It Up…

In conclusion, investing in India’s highest dividend yield stocks can be a good strategy for investors looking for a steady income source. Many companies offer dividends as compensation to their shareholders while signalling their healthy financial growth to keep the investor’s interest intact. All in all, investors can refer to our prepared dividend smallcases (offering Dividend portfolios like Smart Beta, Dividend Stars, and Dividend Aristocrats) that include the highest dividend paying companies offering high dividends to their shareholders over time. 

Frequently Asked Questions About Highest Dividend Paying Stocks

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