Are you looking for the best Indian dividend stocks to buy and hold for your equity portfolio this year?
Quality dividend stocks remain a popular option among Indian investors. It presents a way for you to earn a passive stream of income, and several investors build their equity portfolios around these companies.
Typically, companies that pay you a dividend generate consistent profits that are distributed to shareholders. So, ideally, these stocks should pay dividends across market cycles.
Below are my nine picks for the best Indian stocks for investors in 2023.
How to choose the right dividend stock on the NSE?
Before investing in a dividend stock, you need to consider several factors, such as the dividend yield. This metric is calculated by dividing a company’s dividend per share as a percentage of its share price. So, if a stock is priced at ₹100 and pays annual dividends of ₹5, it has a dividend yield of 5%.
You also need to consider your investment goals and risk appetite before building a portfolio of dividend stocks on the NSE. Other key metrics include:
Sustainability of payouts: A dividend yield should be sustainable, which means it should have an optimal payout ratio. The company needs to generate enough profits to pay dividends, repay debt and reinvest in capital expenditures to fund future growth.
Potential for total returns: In addition to the yield, a dividend stock should also derive returns in the form of capital gains. Ideally, the company needs to increase its revenue and earnings consistently over time.
Let’s now take a look at some of the highest dividend-paying stocks in India.
Best Indian Dividend Stocks:
Vedanta
Vedanta is a diversified natural resources company headquartered in Mumbai, India. It has operations in various sectors, including oil and gas, zinc, lead, silver, copper, iron ore, aluminum, and power.
Its business model involves acquiring and operating mines, refineries, and power plants in India and globally. Vedanta focuses on the exploration, production, and processing of natural resources and sells its products to domestic and international customers.
In the oil and gas sector, Vedanta has exploration and production operations in India, South Africa, and Australia. The company’s zinc, lead, and silver business is one of the largest in the world, with mines and smelters in India, Australia, and Namibia. Vedanta is also a major producer of copper in India and Zambia, and aluminum in India.
Additionally, its power business includes generating and selling electricity to industrial and retail customers. The company operates several power plants in India and has a presence in solar and wind energy.
Sector: Mining
Vedanta Market Cap: ₹1.15 trillion
Vedanta Share Price NSE: ₹310.85
Vedanta Dividend Yield: 15.9%
Marico
Marico company operates in the consumer products industry, with a focus on personal and beauty care products. It manufactures, markets, and sells a range of products in the hair care, skin care, edible oil, and health food categories. The company’s flagship hair care brands include Parachute, Nihar, and Livon, while its skincare brands include Mediker and Revive.
Marico operates a two-pronged distribution strategy to reach its customers. Firstly, it distributes products through traditional retail channels such as mom-and-pop stores, general trade outlets, and modern trade stores. Secondly, Marico has also embraced e-commerce to reach its customers, offering its products on various online platforms such as Amazon, Flipkart, and BigBasket.
Marico’s business model focuses on product innovation and creating strong brand equity for its products. It invests heavily in research and development to create new products that cater to evolving customer needs. Marico also uses celebrity endorsements and advertising to build brand awareness and increase customer loyalty.
Sector: FMCG
Marico Market Cap: ₹631 billion
Marico Share Price NSE: ₹489
Marico Dividend Yield: 2%
HCL Tech
HCL Technologies Limited is an Indian multinational information technology (IT) services and consulting company. It provides IT services and solutions to a variety of industries, including financial services, healthcare, retail, manufacturing, and telecommunications. HCL’s services include software development, infrastructure management, engineering and R&D services, digital and analytics services, and business process outsourcing.
It operates using a “Mode 1-2-3” strategy, which is designed to help clients with their digital transformation journey. Mode 1 involves the company’s traditional IT services, such as application development and maintenance, infrastructure management, and engineering services. Mode 2 focuses on next-generation digital services, such as cloud, analytics, and IoT. Mode 3 involves products, platforms, and partnerships to help clients achieve specific business outcomes.
HCL’s business model is focused on building long-term relationships with clients, providing high-quality services, and delivering value to its customers. The company has a global presence with offices in over 40 countries and serves clients in more than 30 languages.
Sector: Technology
HCL Market Cap: ₹3 trillion
HCL Share Price NSE: ₹1,115
HCL Dividend Yield: 4.3%
IRFC
Indian Railway Finance Corporation (IRFC) is a public sector enterprise that provides financial services to the Indian railway sector. It was established in 1986 as the financing arm of the Indian Railways to provide financial assistance to the Indian Railways for various projects, including the acquisition of rolling stock (locomotives, coaches, wagons), railway infrastructure, and other operational requirements.
IRFC raises funds from various sources, including banks, financial institutions, and international capital markets, and then lends it to the Indian Railways at competitive interest rates.
Its business model is based on providing financial support to the Indian Railways in a manner that helps the latter achieve its long-term objectives. The company’s financing model involves issuing tax-free bonds, term loans, and leasing solutions to finance railway projects. IRFC also offers financial assistance for the modernization of rolling stock, infrastructure development, and the implementation of technology-based solutions to improve the efficiency of the railway sector.
IRFC’s business model is focused on meeting the financing needs of the Indian Railways while maintaining a healthy balance between profitability and social objectives. The company aims to provide affordable and flexible financing solutions to the Indian Railways while generating sustainable returns for its stakeholders.
Sector: Financial Services
IRFC Market Cap: ₹372 billion
IRFC Share Price NSE: ₹28.5
IRFC Dividend Yield: 5.6%
Bajaj Auto
Bajaj Auto Limited is an Indian two-wheeler and three-wheeler manufacturing company headquartered in Pune, India. It is one of the largest manufacturers of two-wheelers in India and has a global presence in over 70 countries.
Its product portfolio includes motorcycles, scooters, and auto-rickshaws. Bajaj Auto has built a vertically integrated manufacturing process, as it owns and operates the production facilities used for various components of the vehicles it produces. It also has a robust distribution network that includes dealerships, sub-dealerships, and service centers that enable it to reach customers across the country and abroad.
Bajaj Auto is investing heavily in research and development to create new and advanced products that cater to the evolving needs of customers. The company has entered into several partnerships and collaborations with other companies to leverage its strengths and expand its product offerings.
Baja Auto enjoys strong brand equity and is one of the most recognized and trusted brands in the two-wheeler industry in India. The company’s advertising and promotional strategies have focused on creating a strong emotional connect with its customers, further strengthening the brand.
Sector: Automobiles
Bajaj Auto Market Cap: ₹1.15 trillion
Bajaj Auto Share Price NSE: ₹3,904
Bajaj Auto Dividend Yield: 3.6%
Oracle Financial Services
Oracle Financial Services Software Limited (OFSS) is an Indian technology company that provides software solutions to the banking and financial services industry. The company is headquartered in Mumbai, India, and is a subsidiary of Oracle Corporation, a global technology giant.
OFSS is focused on providing comprehensive technology solutions to enterprises, enabling them to streamline their operations, reduce costs, and improve customer experience. Its product portfolio includes software solutions for core banking, risk management, compliance, treasury management, and payments processing.
OFSS invests heavily in developing new products and improving its existing offerings. The company’s R&D efforts are driven by a team of experts with extensive experience in the banking and financial services industry.
OFSS is also focused on providing customized solutions to meet the unique needs of its clients. Its solutions are designed to be flexible, scalable, and customizable, enabling banks and financial institutions to tailor their technology solutions to their specific needs.
OFSS’s model is further supported by a robust sales and marketing strategy, with the company leveraging its strong brand equity and global reach to target customers across geographies.
Sector: Technology
Oracle Finserv Market Cap: ₹280 billion
Oracle Finserv Share Price NSE: ₹3,239
Oracle Finserv Dividend Yield: 5.9%
Brookfield India REIT
Brookfield India Real Estate Trust (BIRET) is a real estate investment trust (REIT) that owns, develops, and manages commercial properties in India. The trust is sponsored by Brookfield Asset Management, a global alternative asset manager with over $600 billion in assets under management.
BIRET is focused on acquiring and managing commercial properties in India, such as office buildings, and business parks. The trust generates rental income from its properties, which is distributed to its unitholders in the form of dividends.
BIRET primarily acquires and manages high-quality commercial properties with long-term leases to reputable tenants. The trust’s investment strategy is focused on acquiring properties with stable cash flows, attractive yields, and potential for value creation through active asset management and redevelopment.
BIRET’s business is supported by a strong asset management team that has deep expertise in the Indian real estate market. The trust has a diversified portfolio of properties in India’s major commercial centers, providing exposure to the growth potential of India’s real estate market.
Sector: Real Estate
Brookfield India REIT Market Cap: ₹9.16 trillion
Brookfield India REIT Share Price NSE: ₹273
Brookfield India REIT Dividend Yield: 7.3%
Sonata Software
Sonata Software is a technology company headquartered in Bangalore, India. It provides software solutions and services to customers in a variety of industries, including retail, distribution, travel, and software product development.
Sonata Software is focused on providing technology solutions and services that help its customers improve their operational efficiency, customer engagement, and overall competitiveness. Its service offerings include software development and maintenance, cloud computing, analytics, digital transformation, and others.
Sonata Software has a strong focus on customer satisfaction and quality and is committed to delivering innovative solutions The company’s software development process is based on Agile methodologies, with a focus on continuous improvement, collaboration, and transparency.
Sonata Software’s business model is supported by a global delivery model, which leverages its development centers in India, Europe, and the United States to provide cost-effective, high-quality solutions to its customers across the globe. Its delivery model is based on a combination of onsite, offshore, and nearshore delivery, which enables Sonata to provide flexible and scalable solutions that meet the unique needs of its customers.
Sector: Technology
Sonata Software Market Cap: ₹103.29 billion
Sonata Software Share Price NSE: ₹735.85
Sonata Software Dividend Yield: 2.5%
ITC
ITC Limited is an Indian multinational conglomerate with a diversified business portfolio that includes fast-moving consumer goods (FMCG), hotels, paperboard, and packaging, agri-business, and information technology.
ITC owns a multi-business portfolio that leverages synergies between its various businesses to drive growth and value creation. The company’s FMCG business is one of its key drivers of growth, with a focus on categories such as cigarettes, packaged foods, personal care products, and stationery.
ITC’s FMCG business leverages its extensive distribution network and strong brand equity to reach customers across India and other international markets. Its agri-business is another important business segment, which includes sourcing, processing, and exporting various agricultural commodities such as coffee, wheat, and spices.
ITC’s hotel business operates a chain of luxury hotels and resorts in India and other countries, with a focus on delivering exceptional customer experiences and superior hospitality. Its paperboards and packaging business is focused on providing eco-friendly packaging solutions to customers across various industries.
ITC also runs an information technology business that provides a wide range of IT solutions and services, including consulting, application development, and system integration to customers across various industries.
Sector: Multiple
ITC Market Cap: ₹4.76 trillion
ITC Share Price NSE: ₹384
ITC Dividend Yield: 3.1%
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