List of High Dividend Penny Stocks in India

What are High Dividend Penny stocks?

High dividend penny stocks are low-priced shares, usually at or below ₹10, that pay good dividends. They offer investors a combination of regular income and growth. Dividend-paying penny stocks often offer higher yields but can show price volatility and inconsistent payouts. Assessing dividend yield, earnings stability, and debt levels helps understand their financial health.

Overview of 5 Best Penny Stocks With Dividends in India

1. Coromandel Agro Products and Oils: Coromandel Agro Products and Oils specialises in edible oils, seeds, and crop nutrients. It operates an integrated supply chain for sourcing and processing oilseeds, formulating fertilizers, distributing through rural networks.
2. Varanium Cloud: Varanium Cloud delivers secure cloud solutions to SMEs and enterprises, offering IaaS, PaaS, and hybrid cloud services. It provides managed hosting, 24/7 monitoring, scalable infrastructure, and tailored IT support.
3. Nirbhay Colours India: Nirbhay Colours India manufactures organic and inorganic pigments for cosmetics, coatings, plastics, and textiles. It leverages R&D-driven production, speciality pigment formulations, quality testing, and exports products to global industrial markets.
4. IL&FS Investment Managers: IL&FS Investment Managers provides asset management services across mutual funds, alternative investment funds. It offers portfolio management, wealth advisory, risk management, compliance oversight, and multi-channel distribution to institutional and retail clients.

How to Invest in High Dividend Penny Stocks?

Here is how one can invest in the best dividend stocks in 2025:

1. Open a demat/trading/stockbroker account. You can open a demat account with smallcase!
2. Conduct thorough research into the best dividend stocks in 2025 that are of interest to you. Investors can use tools like the Tickertape Stock Screener to do this. The screener offers 200+ built-in filters to choose from, and investors can choose the parameters to research the penny stocks dividend list.
3. Place a ‘Buy’ Order on the best dividend-paying stocks of your choosing.

Calculation of Dividend

Dividend per share (DPS) is the total dividend a company pays out for each share over a period of time, including all types of dividends declared.

Dividend Per Share Formula: DPS = Total Dividends Paid in a Year / Total Outstanding Shares

Dividend per share shows how much each share gets in dividends. Companies with stable or increasing dividends per share have consistent profits and a fixed dividend policy. But dividend per share doesn’t guarantee future dividends or the overall health of the company.

Forms of Dividend

• Cash Dividend: A cash dividend is a payment made by a company to its shareholders in the form of cash per share held. The declared amount per share is directly credited into the shareholder’s bank account. In India, cash dividend is the most common mode of dividend distribution among dividend-paying companies.
• Stock Dividend: A stock dividend is the issuance of additional shares to existing shareholders instead of cash. For example, in a 5:1 stock dividend, an investor gets 5 extra shares for every 1 share held, proportionally increasing their total share count.

Advantages of Investing in High Dividend Penny Stocks in India

• Regular Income Provides Predictable Cash Flow: Past dividend performance does not guarantee future payments. While some companies aim for regular income, dividend cash flows can be unpredictable and depend on earnings, cash flow, and management decisions.
• Reinvesting Dividends Accelerates Portfolio Growth: Reinvested dividends compound over time, accelerating portfolio growth as each dividend purchase buys more shares, generating more dividends and creating a snowball effect that boosts long-term returns.
• Dividend Income Enhances Total Investment Returns: Dividends add significantly to total returns when combined with capital gains, giving you the dual benefits of regular cash flow and share price appreciation.

Risks of Investing in High Dividend Penny Stocks

• Dividend Cuts Can Reduce Expected Income: Payouts can get cut during downturns if cash flows decline, reducing expected income and potentially signalling deeper operational issues that can lead to share price depreciation and investor losses.
• Sector Cyclicality Affects Dividend Stability: High yield opportunities can be concentrated in cyclical sectors, which are earnings sensitive to economic swings, so dividend stability can be jeopardised when industries face downturns or regulatory changes impacting revenue streams.
• High Yields May Signal Financial Trouble: Very high dividend yields can signal trouble, often caused by a falling share price or unsustainable payouts. This may lead to dividend cuts and capital loss when the situation normalises.

Factors to Consider Before Investing in High Dividend Penny Stocks

• Cash Flow Strength Supports Dividend Payments: Positive operating cash flow above net income indicates real cash generation, but companies may still choose to retain cash for priorities like capital expenditures or debt reduction, which can affect their ability to pay dividends.
• Manageable Debt Levels Protect Dividends: Debt-to-equity ratio below 1 means lower leverage and a bigger buffer for dividend payments, because moderate debt levels reduce interest obligations, preserve free cash flow and make the company more resilient in economic downturns.
• Track Record Shows Commitment to Dividends: A 5-year dividend history shows management is committed, because it’s prudent capital allocation and means it’s reliable, which increases investor confidence and attracts long-term holders looking for stable income.
• Understand Industry-Specific Risks: Knowing the sector-specific regulatory or economic headwinds prevents unexpected earnings pressure, because changes in policy, taxation, or demand dynamics can quickly erode profitability and the company’s ability to pay dividends.