Top 50 Highest Dividend Paying Stocks List in India 2023

This post was most recently updated on October 2nd, 2023

If you are looking to earn while holding the stocks in your portfolio then you should look at investing in the Highest Dividend Paying Stocks List in India. These stocks pay consistent dividends which help you generate passive income while you are holding the stocks in your portfolio.

In this article, we’ll take a closer look at the best and highest dividend-paying stocks in India, examining their dividend yields, payout ratios, and financial health.

We’ll also provide insights into the benefits and risks associated with dividend-paying stocks, helping investors make informed investment decisions.

Consider reading: Best Blue Chip Stocks in India

Full List of the Top 50 Highest Dividend Paying Stocks in India in 2023

Source: NSE website

When Does a Company Pay a Dividend?

A company announces dividends after the company board approves. Generally, many companies pass on the profits of the company in terms of dividends to their shareholders if they feel it’s the best use of the cash.

Although paying a dividend is good but at times it’s considered as the inability of the company to do CAPEX. As you can’t paint every stock with the same brush, the dividend yardstick doesn’t hold true for most companies.

For example; most of the PSU companies in India are forced to pay dividends because Govt is the major stakeholder in the company and Govt wants to get money from the PSUs.

So PSUs are most of the time the highest dividend paying stocks in India but they are not always the best companies to invest in.

Also, some tech companies pay good dividends but that doesn’t mean that they are not looking for CAPEX. it’s just that their business model is different.

Although it’s good to keep an eye on stocks paying high dividends it’s not always necessary that the highest dividend paying stocks are the best stocks to invest in.

You have to be very careful in selecting a stock to invest in. You shouldn’t pick a stock just because it has given excellent dividends in the past.

Most of the stocks from the above list have given great dividends in the past but have failed to generate any shareholder returns.

Consider reading: Best Multibagger Stocks in India

How to Understand Which Are Good Dividend Paying Stock Companies?

Good Dividend-paying stocks are those that distribute a portion of their profits to shareholders in the form of dividends.

Dividends paying stocks can provide a steady stream of income for investors and can also be a sign of a company’s financial health and stability.

Here are some tips to help you understand which are the good dividend-paying stock companies:

1. Look for companies with a track record of consistent dividends: Companies that have a history of consistently paying dividends are generally considered more reliable and stable than those that do not. Look for companies that have paid dividends consistently over a period of time, rather than those that have only recently started paying dividends.
2. Consider the company’s financial health: A company’s financial health is a key factor to consider when evaluating its ability to pay dividends. Look for companies with strong financials, including a healthy balance sheet and a history of profitable operations.
3. Evaluate the company’s dividend payout ratio: The dividend payout ratio is the percentage of a company’s earnings that is paid out as dividends. A high payout ratio may indicate that the company is relying heavily on its profits to pay dividends, which could be unsustainable in the long term. Look for companies with a dividend payout ratio that is sustainable and reasonable relative to their industry and peers.
4. Consider the company’s growth prospects: While dividends can be a good source of income, it’s also important to consider a company’s growth prospects. Look for companies with strong growth potential, as this can help support the value of your investment over the long term.

It’s a good idea to do your own research and carefully evaluate a company’s dividend history and financials before investing in dividend-paying stocks.

It’s also a good idea to seek the advice of a financial advisor or professional for guidance on selecting dividend-paying stocks that are suitable for your investment goals and risk tolerance.

Consider reading: Zero Debt Companies in India

Top 10 Best Highest Dividend Paying Stocks in India

Some of the Indian stocks that have given consistently high dividends are:

Top 10 Highest Dividend Paying Penny Stocks in India

Advantages and Disadvantages of Highest Dividend Paying Stocks

Dividend-paying stocks are those that distribute a portion of their profits to shareholders in the form of dividends. Dividend-paying stocks can be a good investment option for those looking for a steady stream of income and for those who are seeking to diversify their portfolio.

Here are some advantages and disadvantages of the highest dividend paying stocks in India:

Advantages:

1. Income: One of the main advantages of high dividend-paying stocks is the income they provide. Dividends can provide a steady stream of income for investors, which can be especially appealing for those who are retired or looking for additional income.
2. Diversification: Dividend-paying stocks can also help diversify a portfolio, as they can provide a source of income that is not tied to the stock’s price movements. This can help reduce the overall risk of the portfolio.
3. Sign of financial stability: Companies that consistently pay dividends are generally considered more financially stable and less risky than those that do not. This can make dividend-paying stocks a good option for risk-averse investors.

Disadvantages:

1. Lower potential returns: One of the main disadvantages of high dividend-paying stocks is that they may have lower potential returns compared to other types of stocks. This is because a portion of the company’s profits is being distributed as dividends, rather than being reinvested in the company’s growth.
2. Volatility: High Dividend-paying stocks may also be more volatile than other types of stocks, as their price may be influenced by changes in the company’s dividends as well as changes in the stock market.
3. Dependence on dividends: Some investors may become overly reliant on dividends as a source of income, which can be risky if the company’s dividends are reduced or eliminated. It’s important to diversify your portfolio and not rely too heavily on any one source of income.

It’s a good idea to carefully consider the advantages and disadvantages of dividend-paying stocks before investing and to seek the advice of a financial advisor if you have any questions.

It’s also a good idea to diversify your portfolio and consider a range of investment options to help manage risk and achieve your financial goals.

Consider reading: Top 100 Best Penny Stocks List to Buy in India

Tax applicable on Dividends from Stocks in India

If you live in India and get dividend income from shares, you’ll have to pay tax based on how much you earn overall. If you don’t live in India but still get dividends from here, you’ll usually pay a 20% tax. But, if your home country has a special agreement with India, you might pay less.

Now, the company or fund that gives you this dividend will cut some tax from your payment if you get more than Rs. 5,000 in a year. Typically, they cut 10% for people living in India and 20% for those living outside. But because of COVID-19, between 14 May 2020 and 31 March 2021, they only cut 7.5% for those living in India. When you file your taxes, you can subtract this cut amount from your total tax.

Here’s a tip: If you took a loan to buy shares and earn dividends, you can reduce your tax a bit. Let’s say you earn Rs. 10,000 as dividend, you can subtract up to Rs. 2,000 (that’s the interest you paid for the loan) before paying tax.

Remember, when you’re filling out your tax form, under the section ‘Income from other sources’, you need to mention your full dividend amount. Then, you can mention any tax cuts or deductions you have.

Final Thoughts on Highest Dividend Paying Stocks in India

In conclusion, investing in the highest dividend paying stocks in India can be a smart way to generate a steady stream of income and build wealth over the long term.

By choosing the right stocks with high dividend yields and strong financial health, investors can potentially earn attractive returns and achieve their financial goals.

However, it’s important to consider the risks associated with dividend-paying stocks, such as potential fluctuations in the stock’s price and changes in dividend policies.

It’s also essential to do your own research and consult a financial advisor before making any investment decisions.

By taking a strategic and thoughtful approach, investors can choose the highest dividend-paying stocks that align with their investment goals and risk tolerance.

Overall, high dividend-paying stocks can be a valuable addition to any investment portfolio, providing a reliable source of income and potential for long-term growth.

FAQ on the Highest Dividend Paying Stocks in India