The dividend yield is a key financial ratio that investors use to assess returns. It shows a company’s annual dividend payments relative to its share price. Typically, a dividend yield of two to five percent is seen as attractive, but market conditions should also be considered. When buying stocks, investors look at various important factors, with dividend yield being one of them. It gives investors an idea of the returns they’re getting from their stock investments.

IOCL

The quarter’s profit after tax (PAT) stands at Rs 5,148.87 crore, marking a significant decline of -56.1% compared to the previous period. The operating profit to interest ratio for the quarter reached its lowest at 5.58 times, while the interest for the quarter reached its highest at Rs 2,147.11 crore.

The company has shown healthy long-term growth, with its operating profit increasing at an annual rate of 19.70%. However, performance reversed in March 2024, when the company reported negative results after four consecutive positive quarters.

From a technical standpoint, the stock is currently in a bullish range. The stock’s technical trend has notably improved, transitioning from a mildly bullish stance on 05-Jul-24. Various technical indicators, including MACD, Bollinger Band, KST, and OBV4, all point towards a bullish outlook for the stock.

With a return on capital employed (ROCE) of 19.7%, the company’s valuation is deemed very attractive, with an enterprise value to capital employed ratio of 1.2.

Despite trading at a discount compared to its average historical valuations, the company’s stock has yielded a significant return of 73.00% over the past year.

Additionally, its profits have surged by 326.2%. Furthermore, the company’s price-earning to growth ratio (PEG) ratio is 0, and currently offers a high dividend yield of 4.75%.

The company also boasts a high institutional holding at 38.31%, indicating significant confidence from institutional investors who possess the capabilities and resources to conduct in-depth fundamental analyses compared to most retail investors.

Vedanta

Based on the financial indicators, the company has demonstrated high management efficiency with a Return on Capital Employed (ROCE) of 25.51%, signifying effective capital utilisation to generate profits. The low EBITDA ratio of 0.84 times indicates a strong ability to service debt. However, the company needs to show better long-term growth, with an annual operating profit growth rate of only 5.04% over the last 5 years.

Additionally, the company has declared negative results for the last seven consecutive quarters, which could indicate underlying challenges. Interest has grown 34.04% to Rs 7,355.00 crore in the previous nine months, whereas the Profit After Tax (PAT) has fallen by -25.49% to Rs 3,496.42 crore. The Profit Before Tax (PBT) has also declined by -11.4% to Rs 3,610.00 crore over the last quarter.

On a positive note, the stock is technically in a bullish range, and the technical trend has improved from mildly bullish on 02-Apr-24, generating a substantial return of 54.52%. Multiple technical indicators, including MACD, Bollinger Band, and KST, suggest a bullish outlook for the stock. With a return on capital employed (ROCE) of 27.7, it has a fair valuation with an Enterprise value to Capital Employed ratio of 2.6. The stock also trades at a discount compared to its average historical valuations.

Furthermore, despite generating a return of 65.84% over the past year, the company’s profits have fallen by -84.3%, indicating a disparity between stock performance and underlying financial health. However, the current stock price offers a high dividend yield of 4.7%, which could be an attractive proposition for income-seeking investors.

COAL INDIA

The company demonstrates strong long-term fundamental strength, boasting an average Return on Equity (ROE) of 48.44%. This indicates a solid performance in generating profits from shareholders’ equity.

In addition, the company has showcased healthy long-term growth, with its Net Sales growing at an annual rate of 8.18% and Operating profit at an impressive 40.60%.

Furthermore, the company maintains a low debt-to-equity ratio (average) of 0 times, reflecting a conservative approach to financing its operations.

From a technical standpoint, the stock is currently positioned in a mildly bullish range, indicating a positive market sentiment towards its performance.

Numerous factors for the stock are bullish, including the Moving Average Convergence Divergence (MACD), Bollinger Band, and Know Sure Thing (KST) indicators, all pointing toward a favourable outlook.

With a Return on Equity (ROE) of 40.6, the stock is deemed to have a fair valuation with a price-to-book value of 3.7. However, it’s worth noting that the stock is trading at a premium compared to its average historical valuations.

Over the past year, the stock has generated an impressive return of 110.66%, outpacing its profits, which have grown 13.8%. The company’s price/earnings-to-growth (PEG) ratio is 0.7, indicating a favourable balance between its price-earnings ratio and anticipated earnings growth rate.

Moreover, the company offers a high percentage dividend yield of 5% at the current price, making it an attractive option for income-seeking investors.

Additionally, the company enjoys high institutional holdings, at 31.76%, which indicates that institutional investors, known for their advanced capabilities and resources, have a significant stake in the company.

The company has also delivered consistent returns over the last 3 years, providing investors with a track record of stability and performance. Highlighting its market dominance, the company’s market cap of Rs 3,03,915 crore positions it as the biggest company in the sector, constituting 67.16% of the entire industry. Furthermore, its annual sales of Rs 1,42,323.98 represent 81.51% of the industry’s total sales, highlighting its significant market presence and influence.

UTI ASSET MANAGEMENT

The company exhibits strong long-term fundamental strength, with an impressive average Return on Equity (ROE) of 13.78%. It has reported positive results for the last four consecutive quarters.

The Profit After Tax (PAT) for the half-year (HY) stands at a robust Rs 348.46 crore, marking a substantial growth of 138.44%. Furthermore, the net sales for the half-year (HY) have grown significantly, reaching Rs 865.13 crore, representing a growth rate of 45.20%.

From a technical standpoint, the stock is currently within a bullish range. The technical trend has shown improvement since 05-Jun-24, generating a remarkable return of 12.93%.

Additionally, multiple factors, including the MACD, Bollinger Band, KST, and OBV indicators, are bullish for the stock.

The company’s ROE stands at 17.4, reflecting a fair valuation with a 3 Price to Book Value. Moreover, the stock trades at a fair value compared to its average historical valuations.

Over the past year, the stock has generated a substantial return of 31.35%, while its profits have risen by 74.8%. The company’s PEG ratio is 0.2, indicating a favourable investment opportunity.

Furthermore, institutional holdings in the company are strong at 66.89%, signifying a high level of confidence from sophisticated investors who possess the capability and resources to analyse companies’ fundamentals thoroughly.

Gujarat Narmada Valley Fertilizers & Chemicals Limited

Based on the latest financial indicators, the company has maintained a low debt-to-equity ratio, with an average of 0.03 times, signalling a robust financial position. Additionally, the operating profit has demonstrated steady long-term growth, expanding at an annual rate of 27.02%, which indicates the company’s strong performance.

However, the company has reported negative results for the past 5 consecutive quarters, reflecting challenges in its operational performance. Specifically, the profit before tax (PBT) less (OI-Quarterly) and profit after tax (PAT-Quarterly) have experienced significant declines, with reductions of -78.57% and -61.3%, respectively. The Return on Capital Employed (ROCE) has also registered its lowest value at 7.99%, suggesting potential inefficiencies in capital utilisation.

From a technical standpoint, the stock is currently exhibiting a mildly bullish trend, and its technical indicators, including MACD and KST, also suggest bullish signals. Nevertheless, the stock is trading at an expensive valuation, with a return on equity (ROE) of 6 and a price-to-book value of 1.2, above historical averages.

Despite the stock’s 14.86% return over the past year, its profits have plummeted by -66.2%, indicating a significant disparity between stock performance and underlying financial health. On the positive side, the company is offering a high dividend yield of 4.5% at the current price, which could be attractive to income investors.

In terms of ownership, the company possesses a high institutional holding of 28.7%, suggesting a strong vote of confidence from institutional investors. This segment of investors has increased their stake by 1.01% over the previous quarter, underscoring their confidence in the company’s prospects.

Oil and Natural Gas Corporation (ONGC)

Based on the latest financial data, the company has maintained a consistently low debt-to-equity ratio, with an average of 0.46 times. The stock is currently in a Bullish range, indicating positive market sentiment toward its performance.

The technical trend has improved from Mildly Bullish on 05-Jul-24, resulting in commendable 1.68% returns since then. Multiple technical indicators, such as MACD, Bollinger Band, KST, and OBV, are signalling a bullish outlook for the stock.

Further analysis reveals an impressive Return on Capital Employed (ROCE) of 16.4, suggesting a very attractive valuation with an Enterprise value to Capital Employed ratio of 1.1. Moreover, the stock trades at a discount compared to its historical valuations, presenting a potential investment opportunity.

Over the past year, the stock has demonstrated strong performance, generating a return of 80.06% while concurrently experiencing a 14.4% increase in profits. This is reflected in its low PEG ratio of 0.5. Additionally, the company offers an enticing high dividend yield of 3.5% at the current price.

The stock exhibits high institutional holdings at 38.06%, indicating confidence from well-resourced investors who can thoroughly analyse the company’s fundamentals. Furthermore, the company has shown consistent returns over the last three years, reinforcing its strong performance.

Notably, the stock has outperformed its industry benchmark in the previous three annual periods, further affirming its robust performance. With a substantial market capitalisation of Rs 3,74,200 crore, the company is the second-largest in its sector, representing 11.98% of the entire industry.

The company’s annual figure of Rs 643,037.01 is significant in terms of sales, accounting for 18.92% of the industry’s total sales. This underscores the company’s prominent position within its sector.

GESHIP

This company maintains a low Debt to Equity ratio (average) of 0.08 times, indicating a stable financial position with a conservative approach to debt. Additionally, the company has demonstrated healthy long-term growth, with its operating profit increasing at an impressive annual rate of 48.61%.

The company reported positive financial results in March 2024 after experiencing two consecutive quarters of negative performance. This turnaround is a positive indication of the company’s resilience and ability to adapt to challenges.

The Operating Profit to Interest (Quarterly) ratio, standing at 16.01 times, reflects the company’s strong ability to cover its interest obligations through its operating profit. Furthermore, the Profit Before Tax Less Other Income (Quarterly) has shown significant growth, reaching Rs 712.67 crore, marking a substantial increase of 48.4%.

In terms of sales performance, the company achieved its highest net sales (Quarterly) of Rs 1,497.33 crore, reflecting strong revenue generation. The technical analysis reveals that the stock is currently in a bullish range, and its technical trend has improved from mildly bullish on 03-Jul-24, resulting in a notable 7.86% return.

Furthermore, several technical indicators, including MACD, Bollinger Band, KST, DOW, and OBV, suggest bullish signals for the stock. Additionally, the stock has high institutional holdings, with institutional investors holding a significant stake of 44.03%. This indicates that institutional investors have confidence in the company’s fundamentals.

Over the previous quarter, institutional holdings have increased by 0.87%, signifying growing confidence in the company’s prospects. The stock has also demonstrated consistent returns over the last three years and outperformed its industry benchmark, generating a remarkable 76.06% return in the past year.

HCL Technology

The company exhibits strong long-term fundamental strength, with an average Return on Equity (ROE) of 21.83%. This signifies that the company is effectively utilising shareholder equity to generate profits.

Additionally, the company has shown healthy long-term growth, with net sales increasing at an annual rate of 12.71%. This sustained growth indicates the company’s ability to capture market share and expand its revenue over time.

Moreover, the company maintains a low Debt to Equity ratio (average) of 0, which indicates a conservative approach to financing and suggests a lower risk level associated with the company’s capital structure.

From a technical standpoint, the stock is currently in a mildly bullish range, suggesting a positive market sentiment regarding its future performance. Furthermore, the technical trend has shown improvement from a sideways pattern on 03-Jul-24 and has resulted in a 1.22% return since then.

Multiple bullish technical indicators, such as MACD, Bollinger Band, and KST, influence the stock’s performance, highlighting a favourable outlook from a technical analysis perspective.

Moreover, the company’s ROE of 23 contributes to its fair valuation, and the 6.1 Price to Book Value indicates that the stock price is reasonable about the company’s book value.

However, it is crucial to consider that the stock is trading at a premium compared to its average historical valuations, which may suggest a potential overvaluation that investors should consider when making investment decisions.

In the past year, the stock has delivered a return of 33.34%, while its profits have risen by 5.7%. The company’s PEG ratio is also 4.6, suggesting it may be overvalued relative to its future growth potential.

Furthermore, the high institutional holdings at 34.64% signify that institutional investors, with their expertise and resources, are heavily involved in analysing the company’s fundamentals, potentially adding credibility to its investment prospects.

ITC

The company’s financial performance shows a strong and consistent average Return on Equity (ROE) of 23.77%, indicating robust long-term fundamental strength. Additionally, the company’s long-term growth prospects appear healthy, with Net Sales showing a steady annual growth rate of 7.35%. The company also maintains a low Debt to Equity ratio (average) of 0 times, a positive indicator of its financial health.

However, the recent performance showed flat results on March 24. Despite this, no key negative triggers are affecting the company, indicating stable prospects. The stock is currently in a Mildly Bullish range based on technical indicators. The technical trend improved from Sideways on 09-Jul-24 and has generated -1.02% returns since then.

Furthermore, various bullish factors such as MACD, Bollinger Band, and KST are positively influencing the stock. The company’s ROE of 27.5 reflects an expensive valuation, with a price-to-book value of 7.6, suggesting that the stock is trading at a premium compared to its average historical valuations.

Over the past year, the stock has underperformed the market, generating a return of -3.79% while its profits have risen by 6.9%. This indicates a PEG ratio of 4.3. Additionally, the company maintains high Institutional Holdings at 84.75%, reflecting the confidence of institutional investors in the company’s fundamentals.

It’s important to note that although the overall market (BSE 500) has generated returns of 37.15% in the last 1 year, the stock has significantly underperformed, generating negative returns of -3.79%.

Power Grid Corporation of India

The company’s low ability to service debt is indicated by its high EBITDA ratio of 3.68 times. On the positive side, it demonstrates healthy long-term growth, with net sales growing at an annual rate of 5.51% and operating profit at 14.92%. However, the results for March 24 were flat.

The operating profit to net sales (Q) ratio is at its lowest, 84.31%. Technically, the stock is in a bullish range. The technical trend improved from mildly bullish on 23-Apr-24, generating 19.14% returns since then. The stock has multiple bullish indicators, such as MACD, Bollinger Band, and KST.

The return on capital employed (ROCE) is 13.2, indicating a very expensive valuation with an enterprise value to capital employed ratio of 2.1. However, compared to its average historical valuations, the stock trades at a discount. Over the past year, the stock has generated a return of 81.06%, while its profits have only risen by 1%, resulting in a PEG ratio of 20.4.

At the current price, the company offers a high dividend yield of 3.5%. Furthermore, institutional holdings in the company stand at 45.1%, signifying that these investors have better capability and resources to analyse companies’ fundamentals than most retail investors.

What dividend yield ratio is considered to be ideal?

The Dividend Yield Ratio must be between two to five percentage.

What is the Dividend yield ratio?

This ratio determines how much dividend a company pays to its shareholders to its stock price per year.

What is the formula for the Dividend Yield Ratio?

The formula is the ratio of Annual Dividends Per Share to Market Price per share.

Which law and section in states about the declaration of dividends in India?

Section 123 of the Companies Act, 2013 in India states about the declaration of dividends in India.

Why should a company pay dividends to its shareholders?

To reward the company’s shareholders and to help maximise their wealth to the value invested by a shareholder in a company.

Is there any law that governs if the company does not have sufficient profits then from where it’s supposed to pay dividends in India?

Yes, Rule 3 in the Companies (Declaration and Payment of Dividend) Rules, 2014 says in such cases dividends have to be paid out of the Reserves made by the company.

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