Over 120 dividend paying companies currently have a dividend yield of over five per cent, according to a study. The dividend yield is based on the current market price and dividend paid in the financial year 2005-06.
The 100-odd companies that paid interim dividend for the financial year 2006-07 are excluded from the sample. Around 959 firms have declared a dividend in the last three years.
The study reveals that high dividend-yield stocks are historically the best bet in a bear market. When the cycle turns bullish, it is likely that these stocks will fetch returns in excess of 100 per cent.
Most of the mid-cap and small-cap companies have been offering high dividend yields. These companies have shown a growth in net profit in the first nine months of FY07.
A total of 959 companies paid total dividend of Rs 15,472 crore (Rs 154.72 billion) in FY06, accounting for 25 per cent of the total net profit of Rs 60,827 crore (Rs 608.27 billion) posted in the given financial year.
Hawkins Cookers, quoting at Rs 83 on the BSE, trades at a dividend yield of 6 per cent.
The company paid a dividend of Rs 5 a share on net profits of Rs 4.03 crore (Rs 40.3 million) in FY06. It posted a net profit of Rs 4.48 crore (Rs 44.8 million) during the first nine months (April-December) of FY07. Allahabad Bank, Wyeth, Berger Paints and Cosmo Films are trading at a dividend yield of 5.5 per cent each.
Allahabad Bank, trading at Rs 72.70, paid a dividend of Rs 4 per share in FY06. The bank has posted Rs 624.41 crore (Rs 6.24 billion) net profit in the first nine months of FY07 against a net profit of Rs 706.12 crore (Rs 7.06 billion) in FY06.
Wyeth paid a dividend of Rs 25 per share on a net profit of Rs 67.72 crore (Rs 677 million) in FY06.
The company posted Rs 79.11 crore (Rs 791 million) net profit in the nine months ended December 2006.
Chambal Fertilizers, Mangalore Chemicals and GNFC from the fertilizers sector, Menon Pistons, Ucal Fuel Systems and Samkrg Pistons from auto ancillaries, Bhuwalka Steel and Rathi Udyog from steel, B N Rathi Securities, Wall Street Finance and Indo Asian Finance from the financial sector offer dividend yield of over 4.5.
Power generation company, Neyveli Lignite offers a dividend yield of 4 per cent. The company had paid a dividend of Rs 2 per share in FY06, and is trading at Rs 50.40 on BSE.
Tube Investments, currently trading at Rs 53.85, offered a dividend yield of 8.7 per cent or Rs 4.70 per share in FY06.