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Companies with best dividend yield

Shashikant Singh
/ Categories: Mindshare
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Companies with best dividend yield

One of the highlights of the union budget was removal of dividend distribution tax (DDT). In her budget speech, Finance Minister  Nirmala Sitharaman announced abolition of DDT. The government currently taxes at the rate of 20.35 per cent (including cess and surcharge) on dividends distributed by companies to their shareholders. This abolition will lead to revenue loss of Rs 25000 crore for the government.

It was mainly aimed to help foreign investors who were not getting any credit of DDT in their home country results in reduction of rate of return on equity capital for them. In order to increase the attractiveness of the Indian Equity Market and to provide relief to a large class of investors,

This may be good for the companies; however, it will still be taxable at the hands of recipients at the applicable tax rate. Bank of the envelope calculation shows that actually this announcement will help the government to garner more as promoters of the company who normally get the higher dividend and pay tax higher rate will now need to pay more. This will be more than to compensate for the revenue loss.

Following is the list of companies that have the highest dividend yield and have continuously increased their dividend per cent in the last three years ending FY19.  

Company Name

Year Ending

Equity Dividend %

Dividend Yield

Price Rs (31-12-20)

National Aluminium Company

201903

115

10.38

42.6

NTPC

201903

60.8

4.49

112.8

Power Grid Corporation Of India

201903

83.3

4.20

186.9

Ashok Leyland

201903

310

3.40

81.95

Cochin Shipyard

201903

130

3.30

379.25

VST Industries

201903

950

2.73

4453.55

Bharat Heavy Electricals

201903

100

2.67

42.7

Multi Commodity Exchange Of India

201903

200

2.48

1244.55

DCM Shriram

201903

490

2.36

371

Cyient

201903

300

2.31

490.8

Heidelberg Cement India

201903

40

2.21

199.9

 

From an individual investor perspective, this abolition will not be of many benefits as all kinds of dividend income i.e. dividend income received from mutual funds and equity shares will now be taxable in the hands of taxpayers.  This will mean more tax to be paid by retail investors falling in higher tax slab.

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