Hi, today we will tell you about 5 such stocks which have paid maximum dividends to their shareholders in 2022.
We have already made 2 more videos under the “Groww Report Card” series, in which we talked about the Top 6 Sectors and 5 Stocks that recorded Highest Net Profit Growth in 2022.
You'll find all of these videos in our "Groww Report Card" playlist. We have put the link to this playlist in the description.
Well, now coming back to today's video.
To pick the top dividend-paying companies, we've considered their "dividend yield."
The dividend yield is a ratio that shows how much dividend a company has paid against its market price.
To calculate the dividend yield of a company, we divide the dividend per share by its current market price.
The formula is something like this.
We have shortlisted 5 companies with the highest dividend yield over the last 12 months.
To calculate the dividend yield, we have considered the market closing prices on December 13, 2022, i.e. Tuesday.
Apart from this, we have selected only those stocks that:
We will cover this list in ascending order of dividend yield, that is, the company with the highest dividend yield will be covered at the end.
So let's start today's list.
The first company on the list is Hinduja Global Solutions Limited.
Hinduja Global Solutions is part of the Hinduja Group of Companies.
Ashok Leyland, HLFL, Hinduja Housing Finance Limited, Hinduja Renewables Energy Pvt. Ltd., and IndusInd Bank Ltd.
Hinduja Global Solutions provides BPM ie Business Process Management Services. In simple language, services like the back office processing and contact center.
As of 31st March 2022, the company has approximately 22,000 employees in 7 different countries.
The dividend yield of the company is 10.34%.
Recently Hinduja Global Solutions has taken another step to diversify its business by acquiring digital media and communication company NDL i.e. NXT Digital Ltd.
After this acquisition, the digital media business of the company will get a boost.
In addition, the company's legacy client services and solutions business already caters to a diverse client base that includes:
Technology and Telecom, consumer and retail, Banking and Financial Services, media and entertainment, chemicals and biotech, and public sector and other sections.
The company's revenue split is also diversified geographically.
About 31% of the revenue comes from India, 24% from the US, 18% from the UK, 14% from Canada, 8% from the Philippines, and 5% from Jamaica.
But in the last few years, the company has invested around 200-500 crores each in its group companies.
These include Hinduja Group Ltd (HGL), Hinduja Realty Ventures Ltd (HRVL), Hinduja Energy India Ltd (HEIL), and NDL.
Apart from this, the company has also invested in the debt of foreign companies of Hinduja Group, which is around Rs 2,645 crore.
It will be necessary to monitor such investments and the exposure of the group company properly.
Another challenge for the company is its shrinking margins.
Hinduja Global Solutions' margins have contracted due to the ongoing rising attrition levels in the IT sector from 13 in FY20 to 4% in FY22.
Let us now look at some of the financial and technical ratios of the company.
The other company is Steel Authority of India Limited (SAIL).
SAIL is one of India's Maharatna public sector companies and one of the largest steel-making companies in the country.
The Government of India holds a 65% stake in the company.
SAIL's plants are mainly located in the eastern and central regions of India which are close to domestic sources of raw materials.
The dividend yield of the company is 10.40%.
The company's biggest strength is that they get the government's support.
Being a Maharatna gives the company autonomy and flexibility in taking investment and capital expenditure decisions.
Investors should keep in mind that the steel industry is highly cyclical depending on the seasonality of the economy, interest rates, and demand-supply.
And the volatility in commodity prices puts significant pressure on the company's operating margin.
As you can see on your screen, we have shown some of the key financial and technical ratios of this company.
The next company we are going to talk about is Hindustan Zinc Limited.
Hindustan Zinc is India's only integrated Zinc, Lead, and Silver manufacturer.
It is one of the lowest-cost zinc producers in the world and also the second-largest zinc producer in the world.
The company is a subsidiary of the Indian mining and metals company Vedanta.
The dividend yield of the company is 11.52%.
The company holds a 75% market share in the domestic zinc market by volume making it a strong leader in this segment.
The company's metal mining capacity is 1.2 MTPA (metric tons per annum).
If we talk about the smelter capacity (the ability to heat metal ores to separate them into different metals), zinc is 913,000 TPA, lead 210,000 TPA and silver is 800 TPA.
This business is capital intensive and zinc ore mines are also limited, due to which the entry barrier in this business is high which protects the company from the competition.
But the company is dependent on the steel sector as 70% of the domestic zinc market is consumed by the steel industry,
due to which zinc producers such as Hindustan Zinc are exposed to the cyclicalities and inherent risks of the steel industry.
As you can see on your screen, we have shown some of the key financial and technical ratios of this company.
The fourth company is the National Mineral Development Corporation or NMDC Limited.
Incorporated in 1958, NMDC is a Navratna Public Sector Enterprise primarily involved in iron ore mining.
NMDC is under the Ministry of Steel and has 7 active iron ore mining leases – five in Chhattisgarh and 2 in Karnataka.
The company is one of the world's lowest-cost iron ore producers.
NMDC is the only company in the country that operates a mechanized diamond mine located at Panna, Madhya Pradesh.
The dividend yield of the company is 11.92%.
One of the key strengths of NMDC is its strong business risk profile, being India's largest iron ore producer.
Its annual production was 42 megatonnes (MT) in FY22, up from 32-35 MT in FY21. And it wants to increase production to 67 MT in 2025.
The company has maintained operating margins of approximately 49% to 57% from 2018 to 2021.
And this capability makes them the lowest-cost iron producer in the world.
Moreover, being a government entity, NMDC is relatively less exposed to regulatory risks and at the same time enjoys strategic importance.
Iron ore is a major raw material for steel production and it sells 70% of its iron ore to only 3 customers– Rashtriya Ispat Nigam Ltd, JSW Steel Ltd, and ArcelorMittal Nippon Steel India Ltd.
And this client concentration can prove to be a risk factor for them when the steel industry is going through a downturn.
Let us now look at some of the financial and technical ratios of the company.
And the last company is Vedanta Limited.
Vedanta is India's largest privately owned metals and mining company.
It is involved in the exploration, production, and sale of some minerals such as zinc, lead, silver, copper, aluminum, iron ore, and oil and gas.
The dividend yield of the company is 21.87%.
Vedanta is India's largest aluminum producer with a 40% market share.
It operates in the zinc sector through its subsidiary Hindustan Zinc.
Apart from this, it has a diversified metals portfolio which also includes industrial metals such as copper, lead, and iron ore.
The company is also involved in the business of crude oil production which provides good diversification from metals industry risk.
A major risk for the company is the regulations related to this sector.
For example, the copper smelting plant in Thoothukudi, Tamil Nadu was closed in 2018 by order of the Tamil Nadu Pollution Control Board.
Earlier also the company's iron ore mining operations in Karnataka and now in Goa were suspended.
Vedanta's Sterlite Copper plant had a lot of protests regarding pollution, which had a bad impact on the company's image, and they had to close the plant.
Now you can see some of the financial and technical ratios of Vedanta on your screen.
So here are the top 5 dividend-paying companies of the year.
Let us remind you that these videos are for educational purposes only, and do not constitute any kind of buy or sell recommendation.
Do you know we also post a lot of interesting content related to the stock market and investing on Groww's Instagram and Facebook handles?
If you don't want to miss out, follow Groww now on Instagram and Facebook.
Don't forget to subscribe to the Groww channel. Bye.