Today, let’s take a closer look at five companies and why they stand out from the other dividend paying stocks.
These companies not only have a track record of consistent dividend payouts but also follow a shareholder-friendly policy.
The essence of a shareholder-friendly policy is to reward investors for their investment by sharing a portion of the company’s profits in the form of dividends.
Let’s take a look…
#1 VST Industries
First on this list is VST Industries.
VST Industries was incorporated in 1930 under the name Vazir Sultan Tobacco Company.
The company’s principal activities are manufacture and sale of cigarettes and unmanufactured tobacco.
Dividend of ₹70-80 between years 2014-2018. In the next four years (2018-2022), this average payout increased to ₹95-140.
What lies ahead in 2023?
For the year ended March 2022, the company declared a dividend of ₹140 per share, which was also the highest dividend declared by VST in its history.
You shouldn’t be surprised if VST declares an even bigger payout this year.
In the dividend distribution policy (last updated in 2020), VST stated that its payout ratio was around 70% of the net profit. This could either increase or decrease based on certain factors but so far so good…
VST has been paying 66% of its profits as average dividends over the last 5 years.
A sign of a strong business shows up in its numbers.
This prudent use of money is also reflected in its high return ratios (5-year average ROE of 35% and 5-year average ROCE of 47%).
In the past one year however, shares of VST Industries have largely underperformed. They have showed some bullish momentum in recent sessions post Budget 2023 announcements.
#2 Sanofi India
Next on this list is Sanofi India.
Sanofi India (Sanofi) is the Indian subsidiary of France-based pharma multinational Sanofi SA.
Sanofi SA is the ninth largest pharmaceutical company in the world by revenue. With 100,000+ employees, the company provides healthcare solutions in over 170 countries.
The key therapeutic areas the company manufacturers drugs are diabetes, cardiology, anti-infectives, allergy, epilepsy, and supplements.
It has a diversified product portfolio with leading brands such as Allegra, Combiflam, and Lantus.
Here’s how Sanofi’s dividend per share has stood out over the years.
Sanofi’s dividend payout has grown consistently over the years.
For the year ended December 2022, Sanofi further announced a special dividend of ₹193 per share in August 2022.
In fact, in the last five years, Sanofi India has consistently paid out dividends at an average yield of over 4%, making it one of the most attractive dividend stocks in the market.
And because of the selloff, Sanofi is available at a bargain. You can invest with a huge margin of safety so when things turn around, you have the opportunity to earn high returns.
Sanofi currently trades near its 52-week low.
#3 Oracle Financial Services
Last on this list is Oracle Financial Services.
When we think aboutIT stocks, the companies that come to mind are TCS, Infosys or perhaps Wipro or even HCL Technologies.
After all, these Big 4 IT companies have emerged as consistent wealth creators for millions of investors over the last few decades.
But when it comes todividend payouts and high yields, Oracle Financial Services Software (OFSS) stands head and shoulders above any other company.
In recent years, OFSS has made significant investments in rapidly moving its solutions to cloud and launched solutions for Liquidity Management, Virtual Account Management, and Supply Chain Finance as cloud services, much ahead of its peers.
The company’s net margins have consistently improved from 26% in FY18 to 46.5% in FY22. The company is almostdebt freeas on 31 March 2022.
Here’s how the company’s dividend payout per share has stood out over the years.
For the past three years, the company is declaring final dividends in the month of May. This year too, investors could expect a higher payout.
Here’s an interesting data point about OFSS…at 16.1, OFSS has a significantly lower price to dividend ratio as compared to its peers.
The price to dividend ratio accounts forcash flowsand is a more trustworthy ratio when it comes to comparing dividends as cash is actually being paid out.
This means the company is actually making money.
Effectively, this ratio indicates how many years it will take for dividends to yield the original share price.
In the past one year, shares of OFSS have underperformed by falling 10%. It has the lowest price to book value ratio within the peer group.
By identifying companies with a history of paying big final dividends, you could potentially enjoy a steady stream of income.
High dividend stocks can provide this steady income stream because companies that pay dividends are often established and financially stable. You can select companies with a track record of paying dividends to shareholders, even during difficult economic conditions.
Now shortlist dividend paying stocks in just a few seconds using Equitymaster’s powerfulIndian stock screener.
Disclaimer:This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
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